Q3 2025 Driven Brands Holdings Inc Earnings Call

Can only mode. Following the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for the operator.

Operator: At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, 4 November 2025. I would now like to turn the conference over to Steve Alexander. Please go ahead.

This call is being recorded on Tuesday November 4th 2025, I would now like to turn the conference over to Steve Alexander. Please go ahead.

Good morning, welcome to driven brands third quarter 2025 earnings conference call.

The earnings release, and net leverage ratio reconciliation are available for download on our website at investors driven brands Dot com.

Steve Alexander: Good morning. Welcome to Driven Brands Q3 2025 earnings conference call. The earnings release and net leverage ratio reconciliation are available for download on our website at investors.drivenbrands.com. On the call with me today are Danny Rivera, President and Chief Executive Officer, and Mike Diamond, Executive Vice President and Chief Financial Officer. In a moment, Danny and Mike will walk you through our financial and operating performance for the quarter and full year. Before we begin our remarks, I would like to remind you that management will refer to certain non-GAAP financial measures. You can find the reconciliations to the most directly comparable GAAP financial measures on the company's investor relations website and in its filings with the Securities and Exchange Commission. During this call, we may also make forward-looking statements regarding our current plans, beliefs, and expectations.

On the call with me today are Daniel Rivera, President and Chief Executive Officer, and Mike Diamond Executive Vice President and Chief Financial Officer.

In a moment, Danny and Mike, who will walk you through our financial and operating performance for the quarter and full year.

Before we begin our remarks I would like to remind you that management will refer to certain non-GAAP financial measures.

You can find the reconciliations to the most directly comparable GAAP financial measures on the company's Investor Relations website and in its filings with the Securities and Exchange Commission.

During this call. We may also make forward looking statements regarding our current plans beliefs and expectations.

These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward looking statements.

Steve Alexander: These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward-looking statements. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question-and-answer session. We ask you to limit yourself to one question and one follow-up. Now, I'll turn the call over to Danny.

Please see our earnings release, and our filings with the Securities and Exchange Commission for more information.

Today's prepared remarks will be followed by a question and answer session.

Speaker #1: Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will remain on music hold. Thank you for your patience.

Ask you to limit yourself to one question and one follow up.

Now I'll turn the call over to Danny.

Good morning, and thank you for joining us to discuss driven brands as third quarter 2025 financial results.

We delivered a strong third quarter with top to bottom strength on all key financial metrics driven grew revenue by 7% and delivered adjusted EBITDA of $136 million.

Danny Rivera: Good morning, and thank you for joining us to discuss Driven Brands' Q3 2025 financial results. We delivered a strong Q3 with top-to-bottom strength on all key financial metrics. Driven grew revenue by 7% and delivered adjusted EBITDA of $136 million. System-wide sales increased 5%, supported by 167 net new stores over the last 12 months, including 39 additions this quarter alone. Same-store sales rose 3%, marking our 19th consecutive quarter of positive same-store sales. We also continued to strengthen our balance sheet, reducing net leverage to 3.8x as we progressed toward our target of 3x by the end of 2026. We remained focused on our growth and cash strategy, driving strong, consistent growth through Take 5 and generating reliable free cash flow from our franchise and car wash segments.

System wide sales increased 5% supported by 167 net new stores over the last 12 months, including 39 additions this quarter alone.

Same store sales rose, 3%, marking our 19th consecutive quarter of positive same store sales. We also continue to strengthen our balance sheet, reducing net leverage to three eight times as we progress toward our target of three times by the end of 2026.

We remain focused on our growth and cash strategy driving strong consistent growth through take five and generating reliable free cash flow from our franchise and carwash segments take.

Take five almost stay in your car 10 minute oil change delivered its 20 <unk> consecutive quarter of same store sales growth and continued to perform across every key metric through.

Danny Rivera: Take 5, home of the stay-in-your-car 10-minute oil change, delivered its 21st consecutive quarter of same-store sales growth and continued to perform across every key metric. Through Q3, we opened 101 net new stores, including 38 in Q3. System-wide sales grew 18% year-over-year, and same-store sales grew 7%, driving adjusted EBITDA growth of 15%. Adjusted EBITDA margins expanded to 35%, up 40 basis points versus last year. These results reflect disciplined execution and a relentless focus on the customer, evidenced by our net promoter score, which remained in the high 70s. We continued to see meaningful growth in non-oil change revenue, which accounted for more than 25% of Take 5 sales for the quarter. Over the past 24 months, we've added new services while simultaneously growing the attachment rates of non-oil change services from the mid-40s to the low 50s.

Through the third quarter, we opened 101 net new stores, including 38 in the third quarter.

System wide sales grew 18% year over year and same store sales grew 7% driving adjusted EBITDA growth of 15%.

Adjusted EBITDA margins expanded to 35% up 40 basis points versus last year.

These results reflect disciplined execution and a relentless focus on the customer evidenced by our net promoter score which remained in the high <unk>.

We continue to see meaningful growth in non oil change revenue, which accounted for more than 25% of take five sales for the quarter over the past 24 months, we've added new services, while simultaneously growing the attachment rates of non oil change services from the mid <unk> to the low fifty's.

We've now completed the rollout of our differential fluid service across the entire system.

Early results have been positive we've seen strong attachment rates healthy margins, great customer feedback and no meaningful cannibalization of existing services.

Danny Rivera: We've now completed the rollout of our differential fluid service across the entire system. Early results have been positive. We've seen strong attachment rates, healthy margins, great customer feedback, and no meaningful cannibalization of existing services. We expect to open approximately 170 new Take 5 locations in 2025, 90 company-owned and 80 franchised. We remain committed to opening 150 or more new units annually, supported by the strong performance of our 2023 and prior vintages, which ramped above $1 million in average unit volumes within 24 months. Our new unit pipeline remains robust, with approximately 900 locations at the end of Q3, of which over a third are site-secured or further along. Finally, we continue to innovate to drive traffic and efficiency across the system. We recently implemented a new media mix model to better allocate advertising dollars and maximize return on advertising spend.

We expect to open approximately 170, new take five locations in 2025 90 company owned 80 franchised.

We remain committed to opening 150 or more new units annually supported by the strong performance of our 2023 and prior vintages, which ramped above $1 million and average unit volumes within 24 months.

Our new unit pipeline remains robust with approximately 900 locations at the end of Q3 of which over a third are site secured or further along.

Speaker #2: One.

Finally, we continue to innovate to drive traffic and efficiency across the system.

Speaker #1: Good morning, ladies and gentlemen, and welcome to the Driven Brands third quarter 2025 earnings conference call. At this time, all lines are in listen-only mode.

We recently implemented a new media mix model to better allocate advertising dollars and maximize return on advertising spend at.

Speaker #1: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

At the shop level, we're testing AI, driven camera technology that detects queuing issues in real time, helping managers adjust staffing and workflow to move more cars more efficiently and ultimately serve more customers.

Speaker #1: This call is being recorded on Tuesday, November 4th, 2025. I would now like to turn the conference over to Steve Alexander. Please go ahead.

Danny Rivera: At the shop level, we're testing AI-driven camera technology that detects queuing issues in real time, helping managers adjust staffing and workflow to move more cars more efficiently and ultimately serve more customers. Where Take 5 drives growth, our franchise and car wash segments anchor cash generation. Our franchise segment, built around some of the most trusted names in the industry, including Meineke, Maaco, and CARSTAR, delivered same-store sales growth of 1% for the quarter versus prior year. That performance was driven by strength at Meineke and sequential improvements at Maaco and CARSTAR. The segment also delivered adjusted EBITDA margins of 66%, an improvement of 90 basis points versus the prior year. Turning to IMO, our international car wash business, growth remained solid but moderated, as previously communicated, with worse weather conditions in Q3 versus the first half of the year.

We're take five drives growth our franchise and carwash segments anchor cash generation.

Speaker #3: Good Good morning. Welcome to Driven Brands third quarter 2025 earnings conference call. The earnings release and net leverage ratio reconciliation are available for download on our website at investors.drivenbrands.com.

Our franchise segment both are on some of the most trusted names in the industry, including Meineke Mako in car Star delivered same store sales growth of 1% for the quarter versus prior year.

That performance was driven by strength at Meinecke and sequential improvements at Mako and car star.

Speaker #3: On the call with me today are Daniel Rivera, president and chief executive officer, and Mike Diamond, executive vice president and chief financial officer. In a moment, Daniel and Mike will walk you through our financial and operating performance for the quarter and full year.

This segment also delivered adjusted EBITDA margins of 66% an improvement of 90 basis points versus the prior year.

Speaker #3: Before we begin our remarks, I would like to remind you that management will refer to certain non-GAAP financial measures. You can find the reconciliations to the most directly comparable GAAP financial measures on the company's investor relations website and in its filings with the Securities and Exchange Commission.

Turning to Aimco are international car wash business growth remained solid but moderated as previously communicated with worst weather conditions in Q3 versus the first half of the year.

Same store sales and revenue for the segment grew 4% versus the prior year, resulting in adjusted EBITDA margins of 28%.

Speaker #3: During this call, we may also make forward-looking statements regarding our current plans, beliefs, and expectations. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from results and events contemplated by these forward-looking statements.

Now turning to our expectations for the remainder of 2025.

Danny Rivera: Same-store sales and revenue for the segment grew 4% versus the prior year, resulting in adjusted EBITDA margins of 28%. Now turning to our expectations for the remainder of 2025. As we've discussed throughout the year, we continue to operate in a dynamic consumer environment. While the consumer faces ongoing pressure, our diversified portfolio has demonstrated resilience across varying market conditions. Q4 has been particularly choppy, with several factors creating a higher degree of macroeconomic uncertainty, including the ongoing government shutdown and the potential disruption of funding for the military and social programs. Given this uncertainty, we believe it prudent to take a more conservative stance as we close out the year. Accordingly, we're narrowing our full-year guidance ranges to reflect both our strong Q3 performance and the evolving macro environment. Michael will provide more details on the outlook in a moment.

As we've discussed throughout the year, we continue to operate in a dynamic consumer environment while.

While the consumer faces ongoing pressure, our diversified portfolio has demonstrated resilience across varying market conditions.

Speaker #3: Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question-and-answer session.

Q4 has been particularly choppy with several factors, creating a higher degree of macroeconomic uncertainty, including the ongoing government shutdown and the potential disruption of funding for the military and social programs.

Speaker #3: We ask you to limit yourself to one question and one follow-up. Now, I'll turn the call over to Danny.

Given this uncertainty we believe it prudent to take a more conservative stance as we close out the year.

Speaker #4: Good Good morning, and thank you for joining us to discuss Driven Brands' third quarter 2025 financial results. We delivered a strong third quarter with top-to-bottom strength on all key financial metrics.

Accordingly, we are narrowing our full year guidance ranges to reflect both our strong third quarter performance.

The evolving macro environment.

Speaker #4: Driven grew revenue by 7% and delivered adjusted EBITDA of $136 million. System-wide sales increased 5%, supported by 167 net new stores over the last 12 months, including 39 additions this quarter alone.

Mike will provide more details on the outlook in a moment.

Our recently announced two important organizational changes that strengthen our foundation for the future.

First Moca lead has been named Chief operating officer of driven brands in this role mobile need to take five and franchise segments. Those are seasoned executive exceptional leader and have driven brands veteran Eni <unk> worked together in 2015, when he led operations for me at <unk>.

Danny Rivera: I recently announced two important organizational changes that strengthen our foundation for the future. First, Mo Khalid has been named Chief Operating Officer of Driven Brands. In this role, Mo will lead the Take 5 and franchise segments. Mo is a seasoned executive, exceptional leader, and a Driven Brands veteran. He and I first worked together in 2015 when he led operations for me at Meineke. After several years with Driven, Mo went on to hold a series of senior roles at Great Wolf Lodge, culminating in his final role of Senior Vice President of Field Operations. He returned to Driven in 2023 as President of Take 5 Oil Change, where he and the team have grown the business to almost 1,300 locations with system-wide sales of $1.6 billion and adjusted EBITDA of over $400 million on a trailing 12-month basis.

Speaker #4: Same-store sales rose 3%, marking our 19th consecutive quarter of positive same-store sales. We also continued to strengthen our balance sheet, reducing net leverage to 3.8 times as we progressed toward our target of 3 times by the end of 2026.

After several years with driven molen onto hold a series of senior roles at Great Wolf Lodge, culminating in his final role of senior Vice President of field operations.

Speaker #4: We remain focused on our growth and cash strategy, driving strong consistent growth through take 5 and generating reliable free cash flow from our franchise and car wash segments.

He returned to driven in 2023 as president of take five oil change, where he and the team have grown the business to almost 3500 locations with system wide sales of $1 6 billion and.

Speaker #4: Take 5, home of the stay-in-your-car 10-minute oil change, delivered its 21st consecutive quarter of same-store sales growth and continued to perform across every key metric.

And adjusted EBITDA of over $400 million.

Speaker #4: Through the third quarter, we opened 101 net new stores, including 38 in the third quarter. System-wide sales grew 18% year-over-year and same-store sales grew 7%, driving adjusted EBITDA growth of 15%.

On a trailing 12 month basis.

As COO mobile work across both segments to drive operational rigor predictability and sustainable growth.

Next Tim Austin has been named President of take five oil change.

Danny Rivera: As COO, Mo will work across both segments to drive operational rigor, predictability, and sustainable growth. Next, Tim Austin has been named President of Take 5 Oil Change. Tim most recently served as President of Take 5 Car Wash, where he did an outstanding job stabilizing the brand, culminating in our successful sale of the business in Q2 of this year. Tim is a fantastic leader and an exceptional operator. He began his career at Walmart, starting as an Assistant Store Manager and rising to Vice President of Store Planning. Over the past six months, Tim has served as COO of Take 5 under Mo, experience that perfectly positions him for this role. These moves reflect the depth of talent we've built across the organization.

Speaker #4: Adjusted EBITDA margins expanded to 35%, up 40 basis points versus last year. These results reflect disciplined execution and a relentless focus on the customer, evidenced by our net promoter score, which remained in the high 70s.

Tim Most recently served as president of take five Carwash or he did an outstanding job stabilizing the brand, culminating in our successful sale of the business in Q2 of this year Tim.

Tim is a fantastic leader and an exceptional operator.

Speaker #4: We continued to see meaningful growth in non-oil change revenue, which accounted for more than 25% of take 5 sales for the quarter. Over the past 24 months, we've added new services while simultaneously growing the attachment rates of non-oil change services from the mid-40s to the low 50s.

He began his career at Walmart, starting as an assistant store manager and rising to vice President of store planning.

Over the past six months, Tim has served as CEO of take five under Moe experienced that perfectly positions him for this role.

These moves reflect the depth of talent, we've built across the organization are Meritocratic culture continues to identify develop and promote talent from within ensuring we have the right leaders in place to drive performance and deliver results.

Speaker #4: We've now completed the rollout of our differential fluid service across the entire system. Early results have been positive. We've seen strong attachment rates, healthy margins, great customer feedback, and no meaningful cannibalization of existing services.

Danny Rivera: Our meritocratic culture continues to identify, develop, and promote talent from within, ensuring we have the right leaders in place to drive performance and deliver results. Let me close with a few key takeaways. First, we delivered a strong Q3 across same-store sales, revenue, Adjusted EBITDA, and Adjusted EPS. Second, Take 5 continued to deliver industry-leading growth. Third, our franchise and car wash segments grew same-store sales in the quarter and remained reliable cash-generating engines. And finally, we've reduced our net leverage to 3.8x and remain on track to reach 3x by the end of 2026. I want to thank our more than 7,500 Driven Brands team members and hundreds of franchise partners who rally every day around our mission and our customers. Your hard work, focus, and execution are what drives our results and our continued success.

Let me close with a few key takeaways.

Speaker #4: We expect to open approximately 170 new take 5 locations in 2025, 90 company-owned and 80 franchised. We remain committed to opening 150 or more new units annually.

First we delivered a strong third quarter across same store sales revenue adjusted EBITDA and adjusted EPS.

Second take five continue to deliver industry leading growth.

Speaker #4: Supported by the strong performance of our 2023 and prior vintages, which ramped above $1 million in average unit volumes within 24 months. Our new unit pipeline remains robust, with approximately 900 locations at the end of Q3, of which over a third are site-secured or further along.

Third our franchise and Carwash segments grew same store sales in the quarter and remains a reliable cash generating engines.

And finally, we reduced our net leverage to three eight times and remain on track to reach three times by the end of 2026.

I want to thank our more than 7500, driven brands team members and hundreds of franchise partners.

Speaker #4: Finally, we continue to innovate to drive traffic and efficiency across the system. We recently implemented a new media mix model to better allocate advertising dollars and maximize return on advertising spend.

Ali everyday around our mission and our customers.

Hard work focus and execution are what drives our results and our continued success.

With that I'll turn it over to my partner and driven CFO Mike.

Speaker #4: At the shop level, we're testing AI-driven camera technology that detects queuing issues in real time, helping managers adjust staffing and workflow to move more cars more efficiently and ultimately serve more customers.

Thank you Danny and good morning, everyone.

Q3, 2025 demonstrated driven consistent execution led by another quarter of strong growth in our take five oil change business improved performance in our franchise brand segment and the continued reduction of our net debt to adjusted EBITDA ratio.

Danny Rivera: With that, I'll turn it over to my partner and Driven CFO, Mike.

Mike Diamond: Thank you, Danny, and good morning, everyone. Q3 2025 demonstrated Driven's consistent execution, led by another quarter of strong growth in our Take 5 Oil Change business, improved performance in our franchise brand segment, and the continued reduction of our net debt to adjusted EBITDA ratio. These results demonstrate the power of our diversified platform, with Take 5 driving continued growth and our disciplined capital allocation moving us closer to our 3x net leverage target by the end of 2026. As a reminder, with the divestiture of our U.S. car wash business, the results for that business are included in discontinued operations and are not included in financial details provided today unless otherwise noted. Driven recorded its 19th consecutive quarter of same-store sales growth, increasing 2.8% in Q3. We added 39 net units in the quarter, led by continued expansion in our Take 5 segment.

Speaker #4: Where take 5 drives growth, our franchise and car wash segments anchor cash generation. Our franchise segment, built around some of the most trusted names in the industry, including Meinecke, Mako, and Carstar, delivered same-store sales growth of 1% for the quarter versus prior year.

These results demonstrate the power of our diversified platform with take five driving continued growth and our disciplined capital allocation moving us closer to our three times net leverage target by the end of 2026.

Speaker #4: That performance was driven by strength at Meinecke and sequential improvements at Mako and Carstar. The segment also delivered adjusted EBITDA margins of 66%, an improvement of 90 basis points versus the prior year.

As a reminder, with the divestiture of our U S. Carwash business. The results for that business are included in discontinued operations and are not included in financial details provided today unless otherwise noted.

Speaker #4: Turning to IMO, our international car wash business, growth remained solid but moderated, as previously communicated, with worse weather conditions in Q3 versus the first half of the year.

Driven recorded its 19th consecutive quarter of same store sales growth, increasing two 8% in Q3.

We added 39 net units in the quarter led by continued expansion in our take five segment.

Speaker #4: Same-store sales and revenue for the segment grew 4% versus the prior year, resulting in adjusted EBITDA margins of 28%. Now turning to our expectations for the remainder of 2025.

System wide sales for the company grew four 7% in Q3 to $1 6 billion total revenue for Q3 was $535 7 million an increase of six 6% year over year.

Speaker #4: As we've discussed throughout the year, we continue to operate in a dynamic consumer environment. While the consumer faces ongoing pressure, our diversified portfolio has demonstrated resilience across varying market conditions.

Mike Diamond: System-wide sales for the company grew 4.7% in Q3 to $1.6 billion. Total revenue for Q3 was $535.7 million, an increase of 6.6% year-over-year. Q3 operating expenses increased $21 million year-over-year, including an increase in company, and independently operated store expenses of $16.4 million, driven by higher sales volumes and additional stores in Q3 of 2025 versus Q3 of 2024. Operating income for Q3 was $61.9 million, an increase of $12.3 million. Adjusted EBITDA for Q3 was $136.3 million, roughly $4.3 million above Q3 last year. As a reminder, Q3 of this year comes without the benefit of PH Vitra, which we divested in August 2024, but two months of which are still included in Q3 2024 results.

Q3, operating expenses increased to $21 million year over year, including an increase in company and independently operated store expenses of $16 4 million driven by higher sales volumes and additional stores in Q3 of 2025% versus Q3 of 2024.

Speaker #4: Q4 has been particularly choppy, with several factors creating a higher degree of macroeconomic uncertainty, including the ongoing government shutdown and the potential disruption of funding for the military and social programs.

Operating income for Q3 was $61 9 million, an increase of $12 3 million.

Speaker #4: Given this uncertainty, we believe it prudent to take a more conservative stance as we close out the year. Accordingly, we're narrowing our full-year guidance ranges to reflect both our strong third-quarter performance and the evolving macro environment.

Adjusted EBITDA for Q3 was $136 3 million roughly $4 $3 million above Q3 last year.

As a reminder, Q3 of this year it comes without the benefit of ph vitro, which we divested in August 2024, with two months of which are still included in Q3 2024 results.

Speaker #4: Michael provided more details on the outlook in a moment. I recently announced two important organizational changes that strengthen our foundation for the future. First, Mo Khalid has been named Chief Operating Officer of Driven Brands.

Adjusted EBITDA margin for Q3 was 25, 4% a decrease of roughly 85 basis points versus Q3 last year as sales growth was offset primarily by the aforementioned increase in store expenses and investments in growth initiatives.

Speaker #4: In this role, Mo will lead the take 5 and franchise segments. Mo's a seasoned executive, exceptional leader, and a Driven Brands veteran. He and I first worked together in 2015 when he led operations for me at Meinecke.

Mike Diamond: Adjusted EBITDA margin for Q3 was 25.4%, a decrease of roughly 85 basis points versus Q3 last year, as sales growth was offset primarily by the aforementioned increase in store expenses and investments in growth initiatives. Net interest expense for Q3 was $23.6 million, down $20.1 million from Q3 last year, led by lower debt balances, including the payoff of our term loan balance and the benefit of the acceleration of our interest rate hedge on our 2022 notes. Income tax was a benefit for the quarter of $21.7 million, driven by a discrete change during Q3 in our tax valuation allowances related to the One Big Beautiful Bill Act, which increased the company's interest deduction. Of note, this positive valuation adjustment is excluded from adjusted EPS in the quarter. Net income from continuing operations for the quarter was $60.9 million.

Net interest expense for Q3 was $23 6 million.

Down $21 million from Q3 last year led by lower debt balances, including the payoff of our term loan balance and the benefit of the acceleration of our interest rate hedge on our 2022 notes.

Speaker #4: After several years with Driven, Mo went on to hold a series of senior roles at Great Wolf Lodge, culminating in his final role of Senior Vice President of Field Operations.

Income tax was a benefit for the quarter of $21 7 million driven by.

Speaker #4: He returned to Driven in 2023 as President of Take 5 Oil Change, where he and the team have grown the business to almost 1,300 locations, with system-wide sales of $1.6 billion and adjusted EBITDA of over $400 million, on a trailing 12-month basis.

Discrete change during Q3, and our tax valuation allowances related to the one big Beautiful Bill Act, which increased the companys interest deduction.

Of note. This positive valuation adjustment is excluded from adjusted EPS in the quarter.

Speaker #4: As COO, Mo will work across both segments to drive operational rigor, predictability, and sustainable growth. Next, Tim Austin has been named President of Take 5 Oil Change.

Net income from continuing operations for the quarter was $60 9 million.

<unk> net income from continuing operations for the quarter was $56 2 million.

Speaker #4: Tim most recently served as President of Take 5 Car Wash, where he did an outstanding job stabilizing the brand, culminating in our successful sale of the business in Q2 of this year.

Adjusted diluted EPS from continuing operations for Q3 was 34.

Mike Diamond: Adjusted net income from continuing operations for the quarter was $56.2 million. Adjusted diluted EPS from continuing operations for Q3 was $0.34, an increase of $0.11 versus Q3 last year, driven by higher operating income on increased sales and lower interest expense. Q3 performance for each of our segments includes Take 5 Oil Change, which represents more than 75% of Driven's overall adjusted EBITDA, had another strong quarter with same-store sales increasing 6.8% and revenue growth of 13.5%. Danny mentioned earlier the ongoing advancements we're making to the Take 5 business model, including better marketing efficiency, technology-led operational improvements, and additional service offerings. Take 5 continues to build on its strong operational foundation by driving attachment of non-oil change services, now over 25% of Take 5's total system-wide sales, and continued growth in the penetration of our most premium synthetic offerings.

An increase of 11 versus Q3 last year, driven by higher operating income on increased sales and lower interest expense.

Speaker #4: Tim is a fantastic leader and an exceptional operator. He began his career at Walmart, starting as an assistant store manager and rising to Vice President of Store Planning.

Q3 performance for each of our segments include.

Take five oil change, which represents more than 75% of driven overall adjusted EBITDA had another strong quarter with same store sales, increasing six 8% and revenue growth of 13, 5%.

Speaker #4: Over the past six months, Tim has served as COO of Take 5 under Mo, experience that perfectly positions him for this role. These moves reflect the depth of talent we've built across the organization.

Speaker #4: Our meritocratic culture continues to identify, develop, and promote talent from within, ensuring we have the right leaders in place to drive performance and deliver results.

Danny mentioned earlier, the ongoing advancements, we're making to the take five business model, including better marketing efficiency technology lead operational improvements and additional service offerings.

Speaker #4: Let me close with a few key takeaways. First, we delivered a strong third quarter across same-store sales, revenue, adjusted EBITDA, and adjusted EPS. Second, Take 5 continued to deliver industry-leading growth.

Take five continues to build on its strong operational foundation by driving attachment of non oil change services now over 25% of <unk> total system wide sales and continued growth in the penetration of our most premium synthetic offerings.

Adjusted EBITDA for the quarter was $107 3 million.

Speaker #4: Third, our franchise and car wash segments grew same-store sales in the quarter and remained reliable, cash-generating engines. And finally, we reduced our net leverage to 3.8 times and remain on track to reach three times by the end of 2026.

Reflecting growth of 15% compared to Q3 2024.

Adjusted EBITDA margin was 35%.

Mike Diamond: Adjusted EBITDA for the quarter was $107.3 million, reflecting growth of 15% compared to Q3 2024. Adjusted EBITDA margin was 35%. We opened 38 net new units in the quarter, of which 21 were company-operated stores and 17 were franchise-operated. Franchise Brands reported a 0.7% increase in same-store sales despite ongoing headwinds in Maaco, our most discretionary business. Segment revenue declined $1.8 million, or 2.3%, in the quarter due to a decline in weighted average royalty rate in the quarter. The segment continued its strategic role as a cash generator in our growth and cash portfolio, delivering an adjusted EBITDA margin of 66% in the quarter. Adjusted EBITDA was $49.7 million, down $0.5 million from the prior year due to the decline in revenue. During the quarter, we added three net new units.

We opened 38 net new units in the quarter of which 21 were company operated stores and 17 were franchise operated.

Speaker #4: I want to thank our more than 7,500 Driven Brands team members, and hundreds of franchise partners, who rally every day around our mission and our customers.

Franchise brands reported a 0.7% increase in same store sales despite ongoing headwinds in Mako are most discretionary business.

Speaker #4: Your hard work, focus, and execution are what drives our results and our continued success. With that, I'll turn it over to my partner and Driven CFO, Mike.

Segment revenue declined $1 8 million or two 3% in the quarter due to the decline in weighted average royalty rate in the quarter.

The segment continued strategic roles, a cash generator and our growth in cash portfolio delivering an adjusted EBITDA margin of 66% in the quarter.

Speaker #2: Thank you, Danny, and good morning, everyone. Q3 2025 demonstrated Driven's consistent execution, led by another quarter of strong growth in our Take 5 Oil Change business, improved performance in our franchise brand segment, and the continued reduction of our net debt to adjusted EBITDA ratio.

Adjusted EBITDA was $49 $7 million down zero point $5 million from the prior year due to the decline in revenue.

During the quarter, we added three net new units.

Speaker #2: These results demonstrate the power of our diversified platform, with Take 5 driving continued growth and our disciplined capital allocation moving us closer to our three times net leverage target by the end of 2026.

Ah Carwash segment, representing our international Carwash business grew again in Q3 with a three 9% increase in same store sales.

Mike Diamond: Our car wash segment, representing our international car wash business, grew again in Q3 with a 3.9% increase in same-store sales. The segment continued to benefit from improved operations and expanded service offerings while experiencing more normalized weather that resulted in moderated growth as compared to the previous two quarters. Adjusted EBITDA decreased $1 million to $15 million, or 27.8% of sales, driven by higher independent operator commissions due to higher sales and higher utility and rent costs. We closed one store in the quarter. Turning to our liquidity, leverage, and cash flow performance for Q3. Our cash flow statement shows a consolidated view of cash flows for Q3, inclusive of discontinued operations. Net capital expenditures for the quarter were $27.3 million, consisting of $39.8 million in gross CapEx, offset by $12.5 million in sale leaseback proceeds.

The segment continued to benefit from improved operations and expanded service offerings, while experiencing more normalized weather that resulted in moderated growth as compared to the previous two quarters.

Speaker #2: As a reminder, with the divestiture of our US car wash business, the results for that business are included in discontinued operations and are not included in financial details provided today unless otherwise noted.

Adjusted EBITDA decreased $1 million.

$15 million or 27, 8% of sales driven by higher independent operator commissions due to higher sales and higher utility and rent costs.

Speaker #2: Driven recorded its 19th consecutive quarter of same-store sales growth, increasing 2.8% in Q3. We added 39 net units in the quarter, led by continued expansion in our Take 5 segment.

We closed one store in the quarter.

Okay.

Turning to our liquidity leverage and cash flow performance for Q3.

Speaker #2: System-wide sales for the company grew 4.7% in Q3 to $1.6 billion, total revenue for Q3 was $535.7 million, an increase of 6.6% year over year.

Our cash flow statement shows a consolidated view of cash flows for Q3 inclusive of discontinued operations.

Net capital expenditures for the quarter were $27 3 million.

Consisting of $39 8 million and gross capex offset by $12 $5 million in sale leaseback proceeds.

Free cash flow for the quarter defined as operating cash flow less net capital expenditures was $51 9 million driven by strong operating performance.

Mike Diamond: Free cash flow for the quarter, defined as operating cash flow less net capital expenditures, was $51.9 million, driven by strong operating performance. As we discussed last quarter, on 25 July, we monetized the seller note received from our divestiture of our US car wash business for $113 million. We used the net proceeds to fully retire our term loan and pay down our revolving credit facility. Strong free cash flow, combined with the proceeds from the sale of the seller note, helped us reduce debt by approximately $171 million during the quarter. At the end of the quarter, our net leverage stood at 3.8x net debt to adjusted EBITDA as compared to 4.1x at the end of Q2 2025.

As we discussed last quarter on July 25, we monetize the seller note received from our divestiture of our U S car wash business for $113 million, we used the net proceeds to fully retire our term loan and pay down our revolving credit facility.

Strong free cash flow combined with the proceeds from the sale of the seller note helped us reduce debt by approximately $171 million during the quarter.

At the end of the quarter, our net leverage stood at three eight times net debt to adjusted EBITDA as compared to four one times at the end of Q2 2025.

On October 20th after the third quarter closed we issued $500 million of new five year securitized notes combined with the drawn our revolver of approximately $130 million.

Mike Diamond: On 20 October, after the Q3 closed, we issued $500 million of new five-year securitized notes, combined with a drawn-out revolver of approximately $130 million, to prepay and retire in full our Class 2019-1 and Class 2022-1 securitized notes. This leverage-neutral transaction simplifies and extends our maturity wall while reducing our annualized interest expense. We used our revolver as part of the transaction to permit us to deploy future free cash flow to continue delivering our balance sheet in a capital-efficient manner. As of the close of the transaction, our revolving credit facility had a balance of $187 million and represents the only non-securitized debt we have outstanding. Following the refinancing, our debt is now 92% fixed rate with a weighted average rate of 4.4%. Year-to-date, through the end of Q3, we have repaid approximately $486 million of debt.

To prepay and retire in full our class of 2019, one and class 2022, one securitized notes.

This leverage neutral transaction simplifies and extends our maturity wall, while reducing our annualized interest expense.

We used our revolver as part of the transaction to permit us to deploy future free cash flow to continue delevering, our balance sheet in a capital efficient manner.

As of the close of the transaction, our revolving credit facility at a balance of $187 million and.

Hence the only non securitized debt we have outstanding.

Following the refinancing our debt is down 92% fixed rate with a weighted average rate of four 4%.

Year to date through the end of Q3, we have repaid approximately $486 million of debt.

As a reminder, you will see on our balance sheet, an increase in current portion of long term debt related to our class of 2019, one securitized notes that were addressed as part of this recent refinancing.

Mike Diamond: As a reminder, you will see on our balance sheet an increase in current portion of long-term debt related to our Class 2019-1 securitized notes that were addressed as part of this recent refinancing. We continue to make progress on our goal of achieving net leverage of 3x net debt to adjusted EBITDA by the end of 2026. We are actively assessing how our capital allocation priorities will change once we achieve this important milestone, but for now, our focus remains on executing on our deleverage commitment while investing in the Take 5 business, which generates a predictable high return on capital spend. I'd now like to provide an update on our full-year outlook. As we enter the fourth quarter, we are narrowing our fiscal 2025 outlook ranges to reflect our year-to-date performance and current expectations for the remainder of the year.

We continue to make progress on our goal of achieving net leverage of three times net debt to adjusted EBITDA by the end of 2026.

We are actively assessing how our capital allocation priorities will change once we achieve this important milestone but for now our focus remains on executing on our deleverage commitment while investing in the take five business, which generates a predictable high return on capital spend.

I would now like to provide an update on our full year outlook.

As we enter the fourth quarter, we are narrowing our fiscal 2025 outlook ranges to reflect our year to date performance and current expectations for the remainder of the year.

As Danny mentioned earlier, we have seen additional choppiness across our portfolio beginning in Q4 as recent macroeconomic factors weigh on the consumer.

Take 5 continues to build on its strong operational Foundation. By driving attachment of non oil change services. Now, over 25% of, take 5's total systemwide, sales and continued growth in the penetration of our most premium synthetic offerings.

Mike Diamond: As Danny mentioned earlier, we have seen additional choppiness across our portfolio beginning in Q4 as recent macroeconomic factors weigh on the consumer. Our revised ranges reflect an appropriate caution for the current economic climate, despite the strong Q3 for Take 5 and despite the sequential Q3 improvement in franchise brands. For the full year, we now expect revenue of $2.1 to 2.12 billion, driven by new unit growth and Take 5's strong performance through Q3, combined with a more measured Q4 outlook. Adjusted EBITDA of $525 to 535 million, balancing Take 5's strong execution throughout the year with a more conservative view for the portfolio in Q4. Adjusted diluted EPS from continuing operations of $1.23 to 1.28, supported by our operational efficiencies and lower interest, and income tax expense.

Our revised ranges reflect an appropriate caution for the current economic climate. Despite the strong third quarter for take five and despite the sequential Q3 improvement in franchise brands.

Adjusted ebitda for the quarter was 107.3 million reflecting growth of 15% compared to Q3 2024.

Adjusted ebit on margin was 35%.

For the full year, we now expect.

We opened 38 net new units in the quarter, of which 21 were company-operated stores and 17 were franchise-operated.

Revenue of two 1% to $2, one 2 billion driven.

Driven by new unit growth and take five strong performance through Q3, combined with a more measured Q4 outlook.

franchise Brands reported a 0.7% increase in the same store sales despite ongoing headwinds in MO our most discretionary business,

Adjusted EBITDA of $525 to $535 million balancing take five strong execution throughout the year with a more conservative view for the portfolio in Q4.

Segment Revenue declined, 1.8 million or 2.3% in the quarter due to a decline in weighted average royalty rate in the quarter.

Adjusted diluted EPS from continuing operations of $1 23 to $1 28 supported by our operational efficiencies and lower interest and income tax expense same.

The segment continued strategic role as a Cash Generator in our growth and cash portfolio, delivering an adjusted, ebit down margin of 66% in the quarter.

Same store sales at the low end of our original 1% to 3% range, reflecting the current consumer environment and ongoing dynamics in Mako and collision.

Adjusted ebit da was 49.7 Million down 0.5 million from the prior year due to the decline in Revenue.

During the quarter. We added 3. Net new units.

Mike Diamond: Same-store sales at the low end of our original 1% to 3% range, reflecting the current consumer environment and ongoing dynamics in Maaco and collision. As for other important operating metrics, we reiterate net store growth between 175 and 200 units, net capital expenditures near the high end of our original range of 6.5% to 7.5% of revenue, driven by opportunistic builds in our Take 5 segment. For interest, we now expect full-year interest expense of approximately $120 million. In closing, Q3 was another strong quarter for Driven's diversified, growth-focused business model. We combined same-store sales growth across each of our segments with strong cash flow generation that enabled us to continue our progress toward achieving 3x net leverage by the end of 2026. With that, I will turn it over to the operator for Q&A, and we are happy to take your questions.

As for other important operating metrics, we reiterate net store growth between 175, and 200 units net capital expenditures and near the high end of our original range of six 5% to seven 5% of revenue driven by opportunistic builds in our take five segment.

Our car. Wash segment, representing our International Car, Wash business, grew again, in Q3 with a 3.9% increase in same store sales. The segment continued to benefit from improved operations and expanded service. Offerings, while experiencing more normalized, whether that resulted in moderated growth as compared to the previous 2 quarters,

For interest we now expect full year interest expense of approximately $120 million.

In closing <unk>.

Q3 was another strong quarter for driven as diversified growth focused business model. We combined same store sales growth across each of our segments with strong cash flow generation that enabled us to continue our progress toward achieving three times net leverage by the end of 2026.

1 million to 15 million or 27.8% of sales, driven by higher independent operator commissions due to higher sales and higher utility and rent costs.

We closed 1 store in the quarter.

Turning to our liquidity, leverage and cash, flow performance for Q3.

With that I will turn it over to the operator for Q&A and we are happy to take your questions.

Our cash flow statement shows a Consolidated view of cash, flows for Q3 inclusive of discontinued operations.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star key followed by the number one on your Touchtone phone, you'll hear prompts that your hand has been raised should you wish to decline from the polling process. Please press the star key followed by the number Q.

Steve Alexander: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star key followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Justin Kleber of Baird. Please go ahead.

Speaker phone please lift the handset before pressing any keys one moment. Please for your first question.

Net. Capital expenditures for the quarter were 27.3 million consisting of 39.8 million in Gross. Capex offset by 12.5 million in sale. Leaseback proceeds. Free cash flow for the quarter, defined as operating cash. Flow less, net capital expenditures was 51.9, Million driven by strong operating performance.

Your first question comes from Justin Kleber of Baird. Please go ahead.

As we discussed last quarter on July 25th, we monetized the seller note received from our Devastator of our US Car, Wash business for 113 million.

Hey, good morning, everyone.

We use the net proceeds to fully retire, our Term Loan and pay down our revolving credit facility.

Just was hoping you could share a bit more color on maybe on how the comps progressed across the quarter, what the what the exit rate looks like and then Mike you alluded to the choppy start here in the fourth quarter is that fairly.

Danny Rivera: Hey, good morning, everyone. Just was hoping you could share a bit more color on maybe on how the comps progressed across the quarter, what the exit rate looked like, and then Mike alluded to the choppy start here in the fourth quarter. Is that fairly broad-based across your business, your various segments? And then just the math would seem to suggest you could see a negative comp in Q4. Just want to ask if that's within a reasonable range of outcomes as you sit here today.

Strong free cash flow combined with the proceeds from the sale of the seller. Note helped us reduce debt by approximately 171 million during the quarter.

Broad based across your business.

Your various segments.

And then just the math would seem to suggest you could see a negative comp in <unk> I just wanted to.

At the end of the quarter, our net leverage stood at 3.8 times net debt to adjusted ebit dies compared to 4.1 times at the end of Q2 2025.

Okay.

Within a reasonable range of outcomes as you sit here today.

Yes, so I'll unpack those questions morning, Justin good good to hear from you. So.

Starting starting from the top I would say Q3 in general performance was consistent within the quarter.

Mike Diamond: Yeah, so I'll unpack those questions. Morning, Justin. Good to hear from you. So, starting from the top, I would say Q3, in general, performance was consistent within the quarter. Obviously, we're happy with those results that we saw in Q3 and think that it demonstrated broad-based consistency and strength across most of the brands that we have. I think turning to Q4. As Danny and I both mentioned, we did see some choppiness as it relates to really the broader consumer environment, which did impact all of our brands. It's inconsistent, hence the word choppy, right? There are some good days, there are some bad days, and we felt it appropriate to demonstrate an appropriate amount of caution as we sit here only one month into Q4. In terms of your question on negative comp for Q4, I'd answer it a couple of different ways.

Obviously, where we're happy with those results that we saw in Q3 and thinks that.

On October 20th. After the third quarter closed, we issued 500 million of new 5-year. Securitized notes. Combined with a drawn out, revolver of approximately 130 million to prepay and retire in full our class. 20191 and class 20221, securitized notes,

It demonstrated broad based consistency and strength across most of the brands that we have I think turning to Q4.

The Leverage neutral, transactions simplifies and extends our maturity wall while reducing our annualized interest expense.

As Danny and I, both mentioned, we did see some choppiness as it relates to.

We used our revolver as part of the transaction to permit us to deploy future free cash flow to continue. Delivering our balance sheet in a capital efficient manner.

Really the broader consumer environment, which did impact all of our brands. It's inconsistent hence the word choppy right. There are some good days there are some bad days.

As of the close of the transaction, our revolving credit facility at a balance of 187 million and represents the only non-secure ties debt. We have outstanding

And we felt it appropriate to demonstrate an appropriate amount of caution as we as we sit here only one month into Q4.

following the refinancing, our debt is now 92% fixed rate with a weighted average rate of 4.4%.

In terms of your <unk>.

In terms of your question on negative comp for Q4 I'd answer it a couple of different ways I think one it's important to start with our take five brand overall continues to be healthy and so we expect that brand to grow in Q4 kind of regardless of where we ultimately end up for the quarter and the full year within that lower end of the range.

Year to date through the end of Q3. We have repaid, approximately 486 million of debt.

Mike Diamond: I think, one, it's important to start with our Take 5 brand overall continues to be healthy, and so we expect that brand to grow in Q4, kind of regardless of where we ultimately end up for the quarter and the full year within that lower end of the range. Mathematically, yes, it is possible if we hit the very low end of that 1%, given the strength we've seen in Q1 through Q3; it could be a negative Q4 from the consolidated. That'll likely largely be driven by franchise brands, given the overweighting collision can play in our same-store sales growth calculation. But I think, in general, the takeaway for Q4 is we're seeing some uncertainty. There is a little bit of choppiness across the entire consumer as it relates to our brands.

as a reminder, you will see on our balance sheet and increase in current portion of long-term debt related to our class 20191, securitized notes that were addressed as part of this recent refinancing

Mathematically, yes. It is possible if we hit the very low end of that 1% given the strength we've seen in Q1 through Q3, it could be a negative Q4 from the consolidated that will likely largely be driven by franchise brands given the over weighting collision can play in our same store sales growth calculation, but I think in general to take.

We continue to make progress on our goal of achieving net. Leverage of 3 times, net debt to adjusted debit da by the end of 2026.

For Q4 is we're seeing some uncertainty there is a little bit of choppiness across the entire consumer as it relates to our brands.

we are actively assessing how our Capital allocation priorities will change once we achieve this important Milestone, but for now our Focus remains on executing on our de-lever commitment, while investing in the Take 5 Business which generates a predictable High return on Capital spend

I'd now like to provide an update on our full year outlook.

But overall, we think take five is healthy and that despite an incredibly strong Q4 'twenty four we'll be lapping we expect that business to grow this quarter.

As we enter the fourth quarter, we are narrowing, our fiscal 2025 Outlook ranges to reflect our year-to-date performance and current expectations for the remainder of the year.

Mike Diamond: But overall, we think Take 5 is healthy and that despite an incredibly strong Q4 2024 we'll be lapping, we expect that business to grow this quarter.

Okay perfect. Thanks for all that color and then a quest.

<unk>.

For you, Mike just on kind of free cash flow conversion it looks like you've been.

As Danny mentioned earlier, we have seen additional choppiness across our portfolio. Beginning in Q4, as recent macroeconomic factors weigh on the consumer.

Danny Rivera: Okay, perfect. Thanks for all that, Caller. And then a question for you, Mike, just on kind of free cash flow conversion. It looks like you've converted about 70% of your adjusted EBITDA year-to-date into free cash flow. Is that a good benchmark in terms of how we should think about this business on a go-forward basis? Could it actually get better to the extent CapEx maybe declines in 2026? Just would love to hear your perspective on that topic. Thank you.

Inverted about 70% of your adjusted EBITDA year to date and the free cash flow is that is that a good benchmark in terms of how we should think about this business on a go forward basis.

Our revised ranges, reflect an appropriate caution for the current economic climate, despite the strong third quarter, for Take 5, and despite the sequential Q3 Improvement in franchise brands.

Could it actually get better.

For the full year. We now expect

To the extent Capex, maybe declines in 2006, just would love to hear your perspective on that topic. Thank you.

Yes, Im not sure im going to get into specifics of 2026, yet is that something Danny and I are still are still working through I think we've demonstrated in.

revenue of 2.1 to 2.12 billion driven by new unit growth and Take 5 strong performance through Q3 combined with a more measured Q4 Outlook.

Mike Diamond: Yeah, I'm not sure I'm going to get into specifics of 2026 yet. Is that something Danny and I are still working through? I think we've demonstrated in all of 2025 our focus on delivering the balance sheet and achieving our commitment of three times net leverage by the end of 2026. I mean, I think we pair that with the fact that our Take 5 business, because it is so strong, because we have such a good pipeline of both franchise and corporate units, those corporate stores give us such an ability for a predictable high rate of return that we want to be opportunistic. Danny mentioned in his remarks the 170-ish total units, a little bit more corporate-owned this year. That's largely driven by the opportunism we see when a good location comes about. We want to take advantage of that.

In all of 2025, our focus on Delevering, the balance sheet and achieving our commitment of three times.

Adjusted ebitda 525 to 535 million balancing. Take 5 strong execution throughout the year with a more conservative View for the portfolio in Q4.

Net leverage by the end of 2026, I mean, I think we pair that with the fact that our take five business because it is so strong because we have such a good pipeline of both franchise and cost units those corporate stores give us such an ability for a predictable high rate of return that we wanted to be opportunistic Danny mentioned in his remarks, the 170 ish.

adjusted diluted EPS from continuing operations of a 1223, to a dollar 28 supported by our operational efficiencies and lower interest in income tax expense

Same store sales at the low end of our original. 1 to 3% range, reflecting the current consumer environment and ongoing Dynamics in Mo and collision.

Total units a little bit more corporate owned this year, that's largely driven by the opportunism, we see when we get when a good location comes about we want to take advantage of that so I think at a high level. Yes, we will continue to be focused on driving EBITDA to free cash flow, making sure. We return that cash to our stakeholders, which right now is focused on that but we want to leave ourselves a little bit of <unk>.

As, for other important operating metrics, we reiterate net store growth between 175 and 200 units. Net capital expenditures near the high end of our original range of 6 and a half to 7 and a half percent of Revenue driven by opportunistic builds and our Take 5 segments.

Mike Diamond: So I think at a high level, yes, we will continue to be focused on driving EBITDA to free cash flow, making sure we return that cash to our stakeholders, which right now is focused on debt. But we want to leave ourselves a little bit of flexibility so that as we see good opportunities to build Take 5 corporate stores, we have the ability to do that.

Flexibility so that as we see good opportunities to build take five corporate stores, we have the ability to do that.

For interest. We now expect full year interest, expense of approximately 120 million

Okay makes sense. Thanks for all the color guys best of luck. Thanks.

For driven Diversified growth focused business model.

Thanks, Ed.

Your next question comes from Simeon Gutman of Morgan Stanley. Please go ahead.

Danny Rivera: Okay, makes sense. Thanks for all the color, guys. Best of luck.

We combine same store, sales growth across each of our segments with strong cash flow generation. That enabled us to continue our progress toward achieving 3 times net leverage by the end of 2026

Hi, This is zach on for Simeon Thanks for taking our question.

Mike Diamond: Thanks, Justin.

Steve Alexander: Your next question comes from Simeon Gutman of Morgan Stanley. Please go ahead.

<unk> has been among the fastest unit growers in the industry since 2019 at the same time it looks like units for this year 2025, we will end a tad below original expectations. So what are your unit growth expectations over the next few years given competition is increasing in new units new units are.

With that, I will turn it over to the operator for Q&A and we are happy to take your questions.

Justin Kleber: Hi, this is Zach on for Simeon. Thanks for taking our question. Take 5 has been among the fastest unit growers in the industry since 2019. At the same time, it looks like units for this year, 2025, will end a tad below original expectations. So what are your unit growth expectations over the next few years, given competition is increasing and new units are slowing more broadly across the industry?

Thank you, ladies and gentlemen, we will now begin the question and answer session.

Boeing more broadly across the industry.

Yes, I'd have to go back and check expectation specifically related to take 5% in 2025, because I would tell you that we feel very good with the numbers, we're going to put up around 170, I think obviously, we've discussed over previous calls theres always going to be a little bit of fluctuation on the mix between franchise and corporate not because.

Do you have a question please press the star key followed by the number 1 on your touchtone phone, you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press the star key followed by the number 2, if you are using a speaker-phone, please lift the handset. Before pressing any Keys 1 moment, please for your first question.

Your first question comes from Justin clever of beard. Please go ahead.

Mike Diamond: Yeah, I'd have to go back and check expectations specifically related to Take 5 in 2025 because I would tell you that we feel very good with the numbers we're going to put up around 170. I think, obviously, as we've discussed over previous calls, there's always going to be a little bit of fluctuation on the mix between franchise and corporate, not because the franchisees don't want to build, but because they deliver such high returns for us. We lean in when we find good opportunities that give us such strong returns. We mentioned on the call, we see a pipeline across the entire Driven portfolio, of which a large part is Take 5 of almost 900 locations, of which about 1/3 are site secured or better, which means we actually have the lease in moving forward.

The franchisees don't want to build but because they deliver such high returns for us we lean in when we find good opportunities that give us such such strong returns we mentioned on the call. We see a pipeline across the entire driven portfolio of which a large part is take five of over 900, almost 900 locations of which about.

Hey, good morning everyone. Um this was hoping you could you could share a bit more color on, maybe on how the comps progressed across the quarter, what the uh what the exit rate looked like and then Mikey alluded to the choppy start uh here in the fourth quarter. Is that fairly

Uh, broad-based across your business. Uh, you know, you're very segments. Um, and then just, you know, the math would seem to suggest you could see a negative component for Q, just want to

ask if that's, um, you know, within a reasonable range of outcomes as you sit here today,

A third or our site secured or better which means we actually have the lease and moving forward to the extent what youre talking about is the fact that Q1 through Q3 is a little bit light relative to the full year.

The natural nature of a franchise business, Danny and I have been experienced with many of them and you always see additional growth in Q4.

Mike Diamond: To the extent what you're talking about is the fact that Q1 through Q3 is a little bit light relative to the full year, that's just the natural nature of a franchise business. Danny and I have been experienced with many of them, and you will always see additional growth in Q4. I wish there was a way to make that not the case, but that's just the nature of the game. So we feel really good with the pipeline. And I think longer term, as we've talked about, we see 150 or more Take 5s for the next several years, given the strong franchise relationships we have and the additional pipeline of company-owned stores we can build that deliver a consistent, predictable high return.

Yeah, so I'll unpack those questions morning, Justin good good to hear from you. So, um, starting starting from the top I would say. Q3 in general performance was consistent within the quarter, um, you know, obviously, we're we're happy with those results that that we saw in Q3. And, and think that, you know, it demonstrated, you know, broad-based consistency and strength, across most of the brands that we have

Wish there was a way to make that not the case, but thats just the nature of the game and so we feel really good with the pipeline and I think longer term.

As we've talked about we see 150 or more take five for the next several years given the strong franchise relationships, we have and the additional pipeline of company owned stores, we can build that deliver a consistent predictable high return Zach. This is Danny I'd just underscore what Mike just said I mean, I think everything was spot on but.

I think turning to Q4 um you know as as Danny and I both mentioned we did see some choppiness as it relates to um you know really the broader consumer environment which did impact all of our Brands. It's inconsistent hence the word choppy. Right? There are some good days there are some bad days um, and we felt that appropriate to, you know, to demonstrate an appropriate amount of of caution. As we, as we sit here, only 1 month in into Q4,

We've committed for a while now to be 150, plus locations at year Nothing's changed with that the pipeline is quite strong and just to give you one data point the franchise side of the business is incredibly healthy we've got about 40% of our franchisees on that side of the business that are either on their second area development agreement or their third.

Danny Rivera: Yeah, Zach, this is Danny. I just underscore what Mike just said. I mean, I think everything was spot on, but we've committed for a while now to be 150-plus locations a year. Nothing's changed with that. The pipeline's quite strong. Just to give you one data point, the franchise side of the business is incredibly healthy. We've got about 40% of our franchisees on that side of the business that are either on their second area development agreement or their third. So that is probably the best data point I can put out there in terms of the health of the franchise side of that business.

So that is that is probably the best data point I can put out there in terms of the health of the franchise side of that business.

Sure.

That's helpful and then just as a quick follow up.

Does it take five value proposition to make it more likely to succeed as it continues to scale those units because.

Uh, in terms of your, you know, in terms of your question on negative comp for Q4, I'd answer it. A couple of different ways. I think 1, it's important to start with our Take 5, brand overall continues to be healthy. And so we expect that brand to grow in Q4, kind of, you know, regardless of where we ultimately end up for the quarter and the full year within that lower end of the range. Um, mathematically yes, it is possible. If we hit the very low end of that 1%, given the strength we've seen in q1 through Q3, it could be a negative Q4 from the Consolidated that will likely largely be driven by franchise brands.

Justin Kleber: That's helpful. And then, just as a quick follow-up, in what ways does the Take 5 value proposition make it more likely to succeed as it continues to scale those units? Because it does seem like there will continue to be industry growth in units over the next few years. So what differentiates the Take 5 model?

It does seem like there will continue to be industry growth in units over the next few years, so what what differentiates the take five model.

Yes, I think it's a great question I mean at the end of the day take five is the home of the state of New car 10 minute all changed.

We're the only national provider that provides a 10 minute oil changes experienced stay in your car with NPS scores in the high <unk>. So at the end of the day. It comes back to the consumer and what is it that the consumer values, but what we've seen and where we've won historically as there's a consumer out there that wants a high quality oil change in 10 minutes stay in your car.

Danny Rivera: Yeah, I mean, I think it's a great question. I mean, at the end of the day, Take 5 is the home of the stay-in-your-car 10-minute oil change. And we're the only national provider that provides a 10-minute oil change experience stay-in-your-car with NPS scores in the high 70s. So at the end of the day, it comes back to the consumer and what is it that the consumer values. But what we've seen and where we've won historically is there's a consumer out there that wants a high-quality oil change and 10-minute stay-in-your-car that's an amazing experience. And the consumer that wants that, that's where we win.

Brands given the overeating Collision can play in our same store sales growth calculation. But I think in general the takeaway for Q4 is we're seeing some uncertainty. Um there is a little bit of choppiness across the entire consumer as it relates to Our Brands, um, you know, but overall we think Take 5 is healthy and that despite, you know, an incredibly strong Q4 24 will be lapping. We expect that business to grow, um, you know, this quarter.

Okay, perfect. Thanks for all that caller. And then a uh, a question um, for for you my just on kind of free cash flow conversion. It looks like you've

That's an amazing experience and the consumer that wants that that's where we win.

Great next question.

Converted about 70% of your adjusted, EBA year to date in the, in the free cash flow is that, um, is that a good Benchmark? In terms of how we should think about this business, on a go forward basis because it actually get better. Um, you know, to the extent capex, maybe declines in 26. Just would love to hear your perspective on on that topic. Thank you.

Yes.

Okay.

Next question comes from Chris O'connell with Stifel. Please go ahead.

Mike Diamond: Great. Next question.

Thanks, Good morning, guys.

Amy you mentioned, a new media mix model being used it takes off could you just elaborate on the changes that were made and why you expect them to kind of benefit brand awareness.

Steve Alexander: Next question comes from Chris O'Cull of Stifel. Please go ahead.

Yeah, I'm not sure. I'm going to get into specifics of 2026 yet. Is that something Danny? And I are still are still working through. I think we've demonstrated in, you know, in all of 2025, our focus on delivering the balance sheet, and a commitment of of 3 times.

Justin Kleber: Thanks. Good morning, guys. Amy, you mentioned a new media mix model being used at Take 5. Could you just elaborate on the changes that were made and why you expect them to kind of benefit brand awareness?

Sure, Yes happy to I mean at the end of the day just to be clear. So we've had media mix models for time for some time now I'll take five we just introduced a new partner and we have.

Danny Rivera: Sure. Yeah, happy to. I mean, at the end of the day, just to be clear, so we've had media mix models for some time now at Take 5. We just introduced a new partner, and we have, let's say, big aspirations for what the tool can do for us. At the end of the day, the media mix model kind of does two things for you. We're in our first iteration of it with the new media mix model that we're using right now. Number one, it helps you just optimize spend across channels and geographies. So it really lets you get pinpoint accuracy in terms of what channels are working in specific parts of the country and how should you optimize that spend. The second thing it does for you is it helps you understand. Should you be investing more or less at the macro level, right?

Let's say big aspirations for what the tool can do for us at the end of the day the media mix model kind of those two things for you and we're in our first iteration of it with the new media mix model that we're using right now but number one it helps you just optimize spend across channels and geographies. So it really lets you get pinpoint accuracy in terms of what channels are working in specific parts of the <unk>.

<unk> and how should you optimize that spend and then the second thing it does for US It helps you understand.

Should you be investing more or less at the macro level right. So is there room on the curve kind of your return curve to actually invest more money into marketing and what's the incremental return youre going to get on that investment. So we are leveraging both sides of that tool again, it's kind of early going we just deployed and now the new tool anyway for the first quarter.

Yeah. Um, not leveraged by the end of 2026. I mean, I think we, we pair that with the fact that our Take 5 business because it is so strong because we have such a good pipeline of both franchise and cost units, those corporate stores, give us such an ability for a predictable High rate of return that we want to be opportunistic. You know, Danny mentioned in his remarks, the 170- total units a little bit more corporate on this year. That's largely driven by the op opportunism. We see when a when a good location comes about, we want to take advantage of that. So I think at a high level yes we will continue to be focused on driving ebit data. Free cash flow making sure we return that cash to our stakeholders, which right now is focused on debt. Um, but we want to leave ourselves a little bit of flexibility so that as we see good opportunities to build. Take 5 corporate stores. Um, we have the ability to do that.

Danny Rivera: So is there room on the curve, kind of your return curve, to actually invest more money into marketing? And what's the incremental return you're going to get on that investment? So we are leveraging both sides of that tool. Again, it's kind of early going. We just deployed it now, the new tool, anyway, for the first quarter here. We think that over time, it's going to improve our return on advertising spend, and we think that it's going to inform just the level of investment that we're making.

Okay, that makes sense. Uh, thanks for all the call guys. Best of luck.

Thank you.

Your next question comes from Simeon. Goodman of Morgan Stanley. Please go ahead.

Here.

But we think that over time, it's going to improve our return on advertising spend and we think that it is going to inform just the level of investment that we're making.

Hi. This is Zach on.

Thanks for taking our question.

Take 5 has been among the fastest

Okay.

Specific spending milestones that could open up access to maybe new marketing channels as the AD fund grows in the system.

Justin Kleber: Okay. Are there any specific spending milestones that could open up access to maybe new marketing channels as the ad fund grows and the system just has more units and better concentration?

As more units and better concentration.

Yes, I mean look we're a national company today talking about take five but there are obviously pockets where we have.

Uni growers in the industry since 2019. Uh, at the same time, it looks like units for this year 2025 will end a tad below. Original expectations. So, what are your unit growth? Expectations over the next few years given competition is increasing and and new unit. New units are slowing more. Broadly across the industry.

More concentration, let's say in some areas, where we're a little bit more sparse as we fill out the map we've talked about getting to 2500 locations. We still think that thats, the Northstar and Thats very doable as we fill in the map and we get more concentration across the country. It does open up some upper funnel mass media, where you can do.

Danny Rivera: Yeah. I mean, look, we're a national company today talking about Take 5, but there are obviously pockets where we have more concentration, let's say, in some areas where we're a little bit more sparse. As we fill out the map, we've talked about getting to 2,500 locations. We still think that that's the North Star, and that's very doable. As we fill in the map and we get more concentration across the country, it does open up some upper funnel mass media where you can do, let's say, national TV or national radio buys that you're hitting a lot of eyeballs, and per eyeball, you're getting a good return, and it's a very efficient buy, so to speak. So I think the short answer, Chris, is yes. As we continue to put dots on the map, it does open up more channels for us.

Let's say national television National radio buys that youre, hitting a lot of eyeballs and per eyeball youre getting.

Youre getting a good return and it's a good very efficient buy so to speak.

So I think the short answer Chris is yes, as we continue to put thoughts on the map. It does open up more channels for us.

Okay. Thank you and just one last one and I apologize if I missed this but.

Sales trends among the lower income consumers that take five shifted in the current quarter, maybe compared to the first half of the year.

Justin Kleber: Okay. Thank you. Just one last one. I apologize if I missed this, but how have sales trends among lower-income consumers at Take 5 shifted in the current quarter, maybe compared to the first half of the year?

Yes.

I'll answer it maybe at the higher level just in terms of driven I mean, we've been saying all year long and there has been pressure on that lower income consumer.

Yeah, I I, I'd have to go back and check, um, expectation specifically related to Take 5 and 2025 because I would tell you, that we feel very good with the, the numbers we're going to put up around 170. I think, you know, obviously was we've discussed over previous calls. There's always going to be a little bit of fluctuation on the mix between franchise and corporate. Not because the franchisees don't want to build, but because they deliver such high returns for us, we lean in, when we find good opportunities to give us such, you know, such strong returns. We mentioned on the call. We see, you know, a pipeline across the entire driven portfolio of which a large part is Take 5 of over 900. Almost 900 locations of, which about, uh, you know, a third are, um, our site secured or better, which means we actually have the lease in moving forward to the extent what you're talking about is the fact that q1 through Q3 is a little bit light relative to the full year that's just a

Danny Rivera: Yeah. I mean, I'll answer maybe at the higher level. Just in terms of Driven, I mean, we've been seeing all year long, there's been pressure, right, on that lower-income consumer. That's been true the entire year. That hasn't really changed in Q4. What we've seen in Q4, as we talked about in our prepared remarks and as Mike highlighted, a bit of choppiness. Some days are up, some days are down. It's been choppier than it's been the rest of the year. There's some new variables here in Q4 that haven't existed. We mentioned them also in the prepared remarks. You've got government shutdown, you've got furloughed employees, you have at least the potential for millions of Americans to have their income disrupted as military or government programs may go unfunded. So. There's some uncertainty out there.

That's been true the entire year that Hasnt really changed in Q4, what we've seen in Q4 as we talked about in our prepared remarks, and as Mike highlighted a bit of Choppiness. Some days, we're up some days are down it's been choppy or than it has been the.

The rest of the year.

There are some new variables here in Q4 that haven't existed we mentioned them also in the prepared remarks, you've got government shutdown, you've got furloughed employees you have at least the potential for millions of Americans to have their income disrupted as military or government programs may go on funded so.

There is some uncertainty out there I think.

Thing that makes us feel good is number one we're coming from a position of strength.

Third quarter was quite strong for us, 7% comps would take five 1% comps for the franchise segment. It was strong quarter I would say secondarily, where non discretionary so at the end of the day, if theres any disruption.

Danny Rivera: I think the thing that makes us feel good is, number one, we're coming from a position of strength. Q3 was quite strong for us. 7% comps for Take 5, 1% comps for the franchise segment. It was a strong quarter. I say secondarily, we're non-discretionary. So at the end of the day, if there's any disruption, maybe you delay that oil change for a period of time, but at the end of the day, you're still going to need to change that oil. You're still going to need to get those brakes. You need to get your car back on the road. And so if there's any temporary dislocation, we tend to see a bounce back.

Natural, you know, nature of a franchise business. Um, you know, Danny and I have been experienced with many of them and you always see additional growth in Q4. I wish there was a way to make that, not just the case, but that's just the nature of the game. And so, we feel really good with the pipeline. And I think longer term, you know, as as we've talked about, we we see 150 or more take fives for the next several years, given the strong franchise relationships. We have, um, and the additional pipeline of company-owned stores. We can build that deliver a consistent predictable High return. Yeah. Is that, this is Danny. I just underscore what Mike just said? I mean, I think everything was spot on, but uh, you know, we've committed for a while, now to be 150 Plus locations a year, nothing's changed with that the pipeline's quite strong and just to, uh, give you 1 data point. The franchise side of the business is incredibly healthy. We've got about 40% of our franchises on that side of the business that are either on their second area, development agreement, or their third. Uh, so that is that is probably the best data point I can put out there in terms of the health of the franchise side of that business.

May be you delay that oil change for a period of time, but at the end of the day Youre still going to need to change that oil youre still going to need to get those breaks you need to get your car back on the road and so if there is any temporary.

Dislocation, we tend to see a bounce back and look at the end of the day all of the uncertainty when Mike and I reissued our outlook for the quarter and we narrowed our ranges all of that uncertainty is baked into that so we feel good about hitting our ranges here in the back half of the year.

That's helpful. And then just as a quick follow-up, uh, in what ways does it? Take 5 value proposition. Make it more likely to succeed as it continues to to scale those units. Because um it does seem like there. There will continue to be industry growth uh, in units over the next few years. So so what, what differentiates the the Take 5 model?

Danny Rivera: And look, at the end of the day, all of the uncertainty when Mike and I reissued our outlook for the quarter and we narrowed our ranges, all of that uncertainty is baked into that. So we feel good about hitting our ranges here in the back half of the year.

Great. Thanks, guys.

Thank you.

Your next question comes from Brian Mcnamara of Canaccord Genuity. Please go ahead.

Justin Kleber: Great. Thanks, guys.

Hi, This is Jonathan on for Brian Thanks for taking the questions.

Mike Diamond: Thank you.

Steve Alexander: Your next question comes from Brian McNamara of Canaccord Genuity. Please go ahead.

Going off of the similar question are you seeing any evidence.

Brian McNamara: Hi, this is Madison Callanon on for Brian. Thanks for taking our questions. Going off of the low-income consumer question, are you seeing any evidence of oil change referrals, and how would you measure that by location? Thanks.

Is referrals and how would you measure that by location.

Yes, I would say look in general we've just seen the low income consumer pressured as we look at the entire year, we've had a strong year quarters, one through three we've reiterated our outlook for the fourth quarter. All we're seeing is just a bit of choppiness here in the fourth quarter. So we continue to see strength that take five nano.

Yeah, I mean I I think it's a great question. I mean at the end of the day, Take 5 is the home of the state in your car 10-minute Oil Change. Uh, and we're the only National provider that provides a 10-minute oil change in experience, stay in your car with NPS scores in the high 70s. So, at the end of the day, you know, it comes back to the consumer and what is it that the consumer values? But what we've seen and where we've won historically is there's a consumer out there that wants, you know, a high quality oil change in 10 minutes, stay in your car. That's an amazing experience. And the consumer that wants that, that that's where we went.

Danny Rivera: Yeah. I'd say, look, in general, we've just seen the low-income consumer pressured. As we look at the entire year, we've had a strong year quarters one through three. We've reiterated our outlook for the fourth quarter. All we're seeing is just a bit of choppiness here in the fourth quarter. So we continue to see strength at Take 5. Non-oil change revenue, we talked about, is 25% right now. We've continued to grow our attachment rates from the mid-40s. If we're going back about a year to a year and a half now, we're sitting here today in the low 50s. We've rolled out a new service. That new rollout of the service differentials, in this case, has gone quite well. So the business has shown a lot of strength. All we're seeing is just a bit of choppiness.

Great. Next question.

Next question comes from Chris, please go ahead.

Thanks. Good morning, guys.

Change revenue, we talked about is 25% right now we've continued to grow our attachment rates from the mid Forty's, if we're going back about a year to year and a half now we're sitting here today in the low fifties, we've rolled out a new service that new rollout of the service differentials in this case has gone quite well so the business has.

Um, Amy you mentioned a new media, mix model being used to take 5, could you just elaborate on the changes that were made and why you expect them to kind of benefit brand, awareness?

Shown a lot of strength all we're seeing is just a bit of choppiness and again there is some new variables in play here in Q4, so a bit of uncertainty in Q4, but again, we feel good about the ranges that we put out there from an outlook perspective.

Danny Rivera: And again, there's some new variables in play here in Q4. So a bit of uncertainty in Q4, but again, we feel good about the ranges that we put out there from an outlook perspective.

Thanks.

Sure.

And Mr Yuen flat.

Sure. Yeah. Happy to. I mean, at the end of the day, just to be clear. So we've had medium, mixed models, uh, for time, for some time now, Take 5, we just, uh, introduce a new partner and we have, um, let's say big aspirations for, for what the tool can do for us. At the end of the day, the media mix model kind of does 2 things for you and and we're in our first iteration of it with the new media mix model that we're using right now, but number 1, it helps you just optimize spend across channels and geographies. So it really lets you get pinpoint accuracy in terms of what channel.

Insurance premiums in the basketball training going down anytime soon.

Brian McNamara: Thanks. And then, what do you think it will take for the collision industry to reflect, as insurance premiums and deductibles don't appear to be going down anytime soon? Thanks.

I'm sorry, you broke up there at the beginning can you can you re ask the question.

Yeah, what do you think it will be paid for that equation industry through flat.

Danny Rivera: I'm sorry. You kind of broke up there at the beginning. Can you re-ask the question?

Insurance premiums and deductibles don't appear to be going down anytime soon.

Brian McNamara: Yeah. What do you think it will take for the collision industry to inflect as insurance premiums and deductibles don't appear to be going down anytime soon?

Yes look I think actually as you've seen the year play out right. So if we look at the insurance industry. In General Q1, Q2, we talked about estimates being down high single digits call. It around 10%. There's two big drivers to that number one is claim avoidance. We've just seen as inflation has picked up here in the last 24 months it hit that.

Danny Rivera: Yeah. Look, I think actually, as you've seen the year play out, right? So if we look at the insurance industry in general, Q1, Q2, we talked about estimates being down, high single digits, call it around 10%. There's two big drivers to that. Number one is claim avoidance. We've just seen, as inflation has ticked up here in the last 24 months, it hit that part of the industry particularly hard. And so you've seen deductibles and premiums go up. The second reason is you've seen total loss rates historically high. And the combination of the two things has driven estimates to be down, call it 10% or so, first quarter, second quarter. The industry did rebound in Q3. It did improve sequentially from Q2 to Q3. If we look into the future, we think Q4 may look a little bit more like Q2.

On Advertising spend, and we think that it's going to inform just the level of investment that we're making.

Part of the industry, particularly hard and so you've seen deductibles and premiums go up the second reason is <unk> seen total loss rates here.

Okay. Are there any specific spending Milestones that could open up access to maybe new marketing channels as the ad fund grows? And, and the system just has more units and better concentration.

Historically high and the combination of the two things has driven estimates to be down call. It 10, or so percent first quarter second quarter.

The industry did rebound in Q3, it did improve sequentially from Q2 to Q3.

If we look into the future. We think Q4 may look a little bit more like Q2. The positive thing for US is when we look at driven collusion.

Our specific businesses, we continue to take share so in a world where the industry maybe has some headwinds we've consistently outperformed the industry that continued in Q3, we mentioned a really strong third quarter with 1% comps for the segment at large our best quarter from a comp perspective for the year and I'd say, most importantly, and I keep kind of going.

Danny Rivera: The positive thing for us is when we look at Driven Collision. Our specific businesses, we continue to take share. So in a world where the industry maybe has some headwinds, we've consistently outperformed the industry. That continued in Q3. We mentioned a really strong third quarter with 1% comps for the segment at large, our best quarter from a comp perspective for the year. And I'd say most importantly, and I keep kind of going back to this for our businesses in particular, when you look at the franchise segment. Ultimately, the role that that plays in the portfolio is cash generation. So what I'm most interested in and what I'm most excited about is when I look at third quarter and I see 66% EBITDA margins.

To this for our businesses in particular, when you look at the franchise segment.

Yeah, I mean look, we're a national company today talking about Take 5, but there are obviously Pockets where we have, um, more concentration. Let's say in some areas that we're we're a little bit more sparse as we fill out the map. Um, we talked about getting to 2500 locations, we still think that that's the North Star and that's very doable as we fill in the map and we get more concentration across the country. It does open up some upper funnel mass media where you can do uh, you know, let's say National TV or national radio buys that you're hitting a lot of eyeballs. Um, and per eyeball you're getting, um, you're getting a good return and it's a good uh, very efficient buy so to speak. Um, so I think the short answer Chris is. Yes. You know as we continue to put dots on the map, it does open up more channels for us.

Ultimately the role that that plays in the portfolio's cash generation. So what I'm most interested in and what I'm. Most excited about is when I look at third quarter IC, 66% EBITDA margins, that's exactly what we need from that that part of the business and Thats what that part of the business has delivered for us.

Okay, thank you. And just 1 last 1, and I apologize if I missed this, but how I have sales Trends among lower income consumers that Take 5 shifted in the current quarter, maybe compared to the first half of the year.

Thank you.

Danny Rivera: That's exactly what we need from that part of the business, and that's what that part of the business has delivered for us.

Your next question comes from Mark Jordan of Goldman Sachs. Please go ahead.

Hey, good morning, Thank you very much for taking my question.

Brian McNamara: Thank you.

Steve Alexander: Your next question comes from Mark Jordan of Goldman Sachs. Please go ahead.

Undertake five same store sales growth came in much better than expected for the quarter and I know you don't break out traffic versus ticket, but just wondering if there's any commentary you can provide there about how the contribution was.

Chris O'Cull: Hey, good morning. Thank you very much for taking my question. On Take 5, same sort of sales growth came in much better than expected for the quarter. And I know you don't break out traffic versus ticket, but just wondering if there's any commentary you can provide there about how the contribution was. Compared to maybe your initial expectations, because I think looking back on the Q2 call, there was some discussion about trends potentially moderating in Take 5 for the second half of this year. So I guess on that note, how did the quarter trend relative to your initial expectations?

Compared to maybe your initial expectations I think looking back on our Q2 call. There was some discussion about trends potentially moderating in the second half of this year. So I.

I guess on that note.

How did the quarter trend relative to your initial expectations.

Yes, so I'd say a couple of things Mark good to talk to you I think first of all we've always said, we believe that take five business as a mid single digit grower over the long term and this quarter no exception, obviously, a little bit a little bit higher.

Mike Diamond: Yeah. So I'd say a couple of things, Mark. Good to talk to you. I think, first of all, we've always said we believe the Take 5 business is a mid-single-digit grower over the long term. In this quarter, no exception, obviously a little bit higher. I think mathematically, there still is this issue that as the new stores ramp, that's a helpful tailwind for us, both in terms of traffic and ticket. But as we grow over a larger base, the impact of that will continue to be less and less. And so over time, we expect that to contribute less to the overall story, although it's still a positive tailwind. I would say the other thing, to your point, we don't break out the sales tree, but we feel good in terms of where we are from both a traffic perspective and an ARO perspective.

Yeah. I mean I I'll answer it maybe at at the higher level just in terms of driven I mean we've been saying all year long there's been pressure right on that lower income consumer. Um, that's been true, the entire year that hasn't really changed in Q4. Um, what we've seen in Q4 as we talked about, in our prepared remarks and as Mike highlighted, you know, a bit of choppiness. Um, some days are up some days are down. It's been choppier than it's been, uh, the rest of the year. Um, you know, there's some new variables here in Q4 that haven't existed we mentioned them. Also, in the prepared remarks, you've got government shutdown, you've got furloughed employees, you have, at least the potential for millions of Americans to have their income disrupted as military or government programs, may go unfunded. So, um, there's some uncertainty out there. I think the, uh, the thing that makes us feel good is, you know, number 1, we're coming from a position of strength. Uh, third quarter is quite strong for us, you know, 7% comps for Take 5, 1% comps for the franchise segment. It was strong quarter, I say, secondarily, you know, we're non-discretionary

I think mathematically there still is this issue that is the new stores.

<unk>, that's a helpful tailwind for us both in terms of traffic and ticket, but as we grow over a larger base the impact of that will continue to be less and less and so over time, we expect that to contribute less to the overall story, although it's still a positive tailwind.

I would say the other thing we to your point, we don't break out the sales tree, but we feel good in terms of where we are from both a traffic perspective and <unk> perspective, we've obviously mentioned some of the various drivers we have an arrow around the ability to do more premium position as well as the additional attach and then as you think about some of our commentary on Q4.

Great. Thanks guys.

Thank you.

Your next question comes from Brian mcnamera of canaccord genuity, please. Go ahead.

Mike Diamond: We've obviously mentioned some of the various drivers we have in ARO around the ability to do more premiumization, as well as the additional attach. And then as you think about some of our commentary on Q4, in addition to the state of the consumer, which we've obviously covered, I'd also just remind you that Q4 of last year was an impressive comp at a 9.2%. And so there is a little bit of moderation we expect, just given how we're going to be lapping that comp this year. But in general, the Take 5 system is healthy. We continue to grow. We feel good about the numbers we put up in Q3. And kind of regardless of where we land in the range for consolidated Driven in Q4, feel good about Take 5's growth prospects.

Or in addition to the state of the consumer which we've obviously covered I'd also just remind you that Q4 of last year was an impressive comp for the nine 2%.

Hi. This is Madison Cowan on for Brian, thanks for taking your questions. Um, going off of the low income consumer question, are you seeing any evidence of oil change referrals and how would you measure that by location? Thanks.

And so there is a little bit of moderation, we expect just given how we're going to be lapping that comp this year, but in general the take five system is healthy we continue to grow we feel good about the numbers, we put up in Q3 and kind of regardless of where we land in the range for consolidated driven in Q4, I feel good about <unk> growth prospects.

Yeah.

Alright, great. Thank you and then just one final one if I could thinking about that differential service offering you rolled out.

I know you might not go into detail about product specific attachment rates. It sounds like attachment is trending maybe above your initial expectations is that right way to think about it.

Chris O'Cull: Thank you. And then just one follow-up, if I could. Thinking about the differential service offering you rolled out, I know you might not go into detail about product-specific attachment rates, but it sounds like attachment is trending maybe above your initial expectations. Is that the right way to think about it?

I'd say mark the way to think about it is we're really happy with the results we're seeing so.

We're fully rolled out nationwide at this point, both company and franchised.

Danny Rivera: I'd say, Mark, look, the way to think about it is we're really happy with the results we're seeing. We're fully rolled out nationwide at this point, both company and franchise. The team's doing an amazing job executing. Just building the muscle of rolling out the new service has been quite good. We haven't seen NPS scores budge at all, so we're able to introduce a new service while continuing to deliver NPS scores in the high 70s, which is obviously fantastic. Margin profile is good. We're not seeing cannibalization. I'd say check marks across the board. For me, the most exciting thing is it proves out another growth vector for Take 5, right? We've shown historically that we can grow organically and we can take our attachment rates and grow the existing kind of basket of services, so to speak.

The team is doing an amazing job executing so we just building the multiple rolling out.

The new service has been quite good.

Yeah, I I'd say look in general. We've just seen the low income consumer pressured. Um, as we look at the entire year, um we've had a strong year quarters 1 through 3, we've reiterated our outlook for the fourth quarter, all we're seeing is just a bit of choppiness here in the fourth quarter. So um we continue to see strength to Take 5 non oil change Revenue. We talked about, as you know, 25% right now. Um, we've continued to grow. Our attachment rates from the mid 40s. You know, if we're going back, you know, about a year to a year and a half. Now we're sitting here today in the low 50s, we've rolled out a new service that new role out of the service. Differentials in this case has gone quite well. Um, so the business uh, has shown a lot of strength. Uh, all we're seeing is just a bit of choppiness. And again, there's some new variables in play here in Q4. So bit of uncertainty in Q4. But again, we feel good about the, uh, the ranges that we put out there from an Outlook perspective.

We haven't seen NPS scores budget also were able to introduce a new service, while continuing to deliver NPS scores in the high <unk>, which is which is obviously fantastic margin profiles. Good we're not seeing cannibalization. So I would say check marks across the board for me. The most exciting things that proves out another growth vector for take five right. So we've shown historically.

Thanks. And then what do you think? It will take for the Collision industry to inflect as insurance premiums and deductibles don't appear to be going down anytime soon. Thanks I'm sorry. You kind of broke up there at the beginning. Can you can you re ask the question?

<unk> that we can grow organically and we can take our attachment rates and grow the existing kind of basket of services. So to speak but now we're showing that we can add a new service to the mix that fits within the fast friendly and simple model that we have and successfully execute that other growth vectors. So for me that's very exciting.

Yeah. Um, what do you think it would take for the Collision industry to inct as insurance premiums and deductibles don't appear to be going down anytime soon?

Danny Rivera: But now we're showing that we can add a new service to the mix that fits within the fast, friendly, and simple model that we have and successfully execute that other growth vector. For me, that's very exciting.

Okay. Thank you very much and congrats on a great quarter.

Thanks, Mark Thank you Mark.

Your next question comes from Robbie Holmes have driven brands. Please go ahead.

Chris O'Cull: Great. Thank you very much. Congrats on a great quarter.

Oh, Hey, Dani Hey, Mike just a quick follow up on Choppiness.

Danny Rivera: Thanks, Mark. Thank you, Mark.

Steve Alexander: Your next question comes from Robby Ohmes of Driven Brands. Please go ahead.

Guys have kind of been answering it but maybe I can ask for a little more clarification. So on the take five Psi Choppiness is a deferral traffic situation or and you would youre seeing no change kind of in attachment rates or prime.

Robby Ohmes: Oh, hey, Danny. Hey, Mike. Just a quick follow-up on choppiness. You guys have kind of been answering it, but maybe going to ask for a little more clarification. So on the Take 5 side, choppiness is a deferred traffic situation, or you're seeing no change kind of in attachment rates or premiumization trends or maybe some color on that?

Premium inflation trends or maybe some color on on that.

Yeah. So welcome to driven brands, Rob me by the way nice to have you on the team.

Okay.

Choppiness look choppiness that take five.

Danny Rivera: Yeah. So welcome to Driven Brands, Robby, by the way. Nice to have you on the team. So yeah, choppiness, look, choppiness at Take 5 is what we've kind of alluded to. It's just we're seeing up and down days. I'd say on the non-oil change revenue side of the equation and attachment rates, we're not really seeing any changes there. So attachment rates continue to be strong. We talked about we've grown them now into the low 50s. We talked about differential and how that's a positive behind the business. As we come into Q4, though, we're just seeing a little bit of choppiness in terms of traffic here and there. And again, it's across the portfolio. And to Mike's point, I mean, he emphasized this earlier, it's choppiness, right? There's some really good days, and then there's some days where it's not so good.

Is what we've kind of alluded to it's just we're seeing up and down days I would say on the non oil change revenue side of the equation and attachment rates were not really seeing any changes there.

So attachment rates continue to be strong we talked about we've grown them now into the low <unk>, we talked about differential and how thats.

The last 24 months, it hit that part of the industry particularly hard. And so you've seen deductibles and premiums go up. The second reason is you've seen total loss rates. Um, historically High and the combination of the 2 things has driven, um, estimates to be down, call it 10 10 or so percent. First, quarter, second quarter. Um, the industry did Rebound in Q3 it did improve sequentially from Q2 to Q3. Um, if, uh, if we look into the future, we think Q4 may look a little bit more, like Q2 the positive thing for us is when we look at Driven Collision our, you know, our specific businesses, we continue to take share. So in a world where you know the industry may have some headwinds, we've consistently outperformed the industry that continued in Q3 we mentioned the really strong third quarter with 1% comps uh for the segment at large. Our best uh quarter from a comp perspective for the year. And I'd say most importantly and I keep kind of going back to this for our businesses in particular, when you look at the franchise segment, um, ultimately the role

Positive behind the business as we come into Q4, though we're just seeing a little bit of Choppiness in terms of traffic here and there and again it's across the portfolio.

The aspect that plays a key role in the portfolio is cash generation. So, what I'm most interested in and what I'm most excited about is, when I look at Q3, and I see 66% margins, that's exactly what we need from that part of the business. And that's what that part of the business has delivered for us.

To Mike's point I mean, he emphasized this earlier, it's choppiness right. It's there is some really good days and then there are some days, where it's not so good so I'd say no changes to non oil change revenue no changes to premium position, we continue to see both of those be quite strong.

Thank you.

Your next question comes from Mark Jordan of Goldman Sachs. Please go ahead.

Danny Rivera: So I'd say no changes to non-oil change revenue, no changes to premiumization. We continue to see both of those be quite strong. But as we look across the portfolio, just a bit of uncertainty here in the fourth quarter and a bit of just up and down given any given day.

But as we look across the portfolio just a bit of uncertainty here in the fourth quarter fourth quarter and a bit of just up and down given given any given day.

That's really helpful and then just.

Sort of taking choppiness over to Mako in car star et cetera.

Is it similar choppiness in direct repair program trends or is that more stable.

Robby Ohmes: That's really helpful. And then just sort of taking choppiness over to Maaco and CARSTAR, etc., is it similar choppiness in Direct Repair Program trends, or is that more stable? What are you seeing on the Direct Repair Program trends?

Hey, good morning. Thank you very much for taking my question. Um, you know, on on Take 5 same store sales growth came in much better than expected to a quarter. And I know you don't break out of traffic, uh, versus ticket. But just wondering if there's any commentary you can provide their about how the contribution was um, compared to maybe your initial expectation because I think, you know, looking back on the 22 call, there was some discussion about Trends, potentially moderating and Take 5 for the second half of this year. So,

What are you seeing on the direct repair program trends.

I guess on that note um how did the the quarter Trend relative to your initial expectations?

Yes, I'd say, it's choppiness across the portfolio right now as it relates to the ERP right. So thats specifically in the collision business I mentioned this a second ago, but.

Danny Rivera: Yeah. I'd say it's choppiness across the portfolio right now as it relates to DRPs, right? So that's specifically in the collision business. I mentioned this a second ago, but if you look at what's been happening with that industry, call it estimates down, high single digits, Q1 and Q2, the overall industry had a bit of a recovery in the third quarter and improved sequentially, Q2 to Q3. We think that Q4 is going to probably soften a little bit, and it's going to look more like Q2. So that's just the industry trends that we're seeing. And that is obviously related to the DRP. That's all kind of related. But again, as I think about our collision business, we've been steadily taking share the entire year. That didn't change Q1 to Q3. We don't expect it's going to change in Q4.

If you look at what's been happening with that industry call. It estimates down high single digits Q1, and Q2, the overall industry had a bit of a recovery in the third quarter and improved sequentially Q2 to Q3, we think that Q4 is going to probably soften a little bit and it is going to look more like Q2.

So that's just the industry trends that we're seeing.

And that is obviously related to the ERP, that's all kind of related.

But again as I think about our collision business, we've been steadily taking share of the entire year that Didnt change Q1 to Q3, we don't expect it is going to change in Q4, so even if the industry softens a little bit in Q4, we expect to continue to take share.

Yeah, so I'd say a couple of things, Mark, good, good to talk to you. I think, first of all, you know, we've always said we believe that Take 5 business is a is a mid single digit grower over the long term and this quarter, no exception. Obviously a little bit, you know, a little bit higher. Um, I think mathematically, there still is this issue that as the new stores ramp, that's a helpful Tailwind for us, both in terms of traffic and ticket. But as we grow over a larger base, the impact of that will continue to be less and less. And so over time, we expect that to contribute less to the overall story. Although it's still a positive Tailwind. Um, you know, I would say the other thing we to your point. We don't break out the sales tree, but we feel good in terms of where we are from both a traffic perspective and an Aro.

That's really helpful. Thanks, so much.

Danny Rivera: So even if the industry softens a little bit in Q4, we expect to continue to take share.

Okay got it.

Your next call comes from Peter Keith with Piper Sandler. Please go ahead.

Robby Ohmes: That's really helpful. Thanks so much.

Danny Rivera: Thanks, Robbie.

Hi, This is Aaron Berg here, thanks for taking our question.

Steve Alexander: Your next call comes from Peter Keith of Piper Sandler. Please go ahead.

Can you break down the comp improvement within franchisee franchise, a bit more specifically maintenance and then are you seeing underlying improvement in collision demand where are you seeing that improvement from nicos continuous improvement framework.

Peter Keith: Hi, this is Sarah on for Peter. Thanks for taking our question. Can you just break down the comp improvement within franchise a bit more, specifically maintenance? And then are you seeing underlying improvement in collision demand, or are you seeing that improvement from Maaco's continuous improvement framework? And then just when did you start to see these sequential improvements throughout the quarter?

And then just when did you start to see the sequential Andre.

That's the question.

Perspective. We've obviously mentioned some of the various drivers we have in aro around you know, the ability to do more premiumization as well as the additional attached. And then as you think about some of our commentary on Q4, in addition to the, you know, the state of the consumer which we've obviously covered. I'd also just remind you that Q4 of last year was a was an impressive compet, a 9.2%. Um, and so there is a little bit of moderation. We expect just given how we're going to be lapping that comp this year, but in general the Take 5 system is healthy, we can continue to grow. We feel good about the numbers we put up in Q3 and you know, kind of regardless of where we land in the range for, for Consolidated driven in Q4 feel good about take 5's, growth prospects.

Hey, sorry, yeah happy to take that so I will start by saying in general we don't breakout the full brand performance across our franchise brands I would I would call. It a couple of things, though that we mentioned in the prepared remarks mining. He continues to operate well Mako, which is our most discretionary brand has been under pressure really.

Mike Diamond: Hey, Sarah. Yeah. Happy to take that. So I will start by saying, in general, we don't break out the full brand performance across our franchise brands. I would call it a couple of things, though, that we mentioned in the prepared remarks. Meineke continues to operate well. Maaco, which is our most discretionary brand, has been under pressure really for the entire year. And while that improved some in Q3, that continues to probably be our most pressured franchise brand. As Danny mentioned, we did see some improvement in Q3 in collision. That has an outsized impact on our same-store sales, if not our revenue, given the amount of system sales that run through our collision boxes. So I think, in general, we feel good about the Q3 performance. But as you probably heard on the call, cautious heading into Q4 for that section.

Thank you and and then just 1 follow on if I could, um, thinking about the differential service offerings, you rolled out, um I know you might not go into detail about product specific attachment rates but but it sounds like attachment is trending. Maybe above your initial expectations. Is that the right way to think about it?

For the entire year and while that improved some in Q3 that continues to probably be our most pressured franchise brand as Danny mentioned, we have we did see some improvement in Q3 and collision.

That has an outsized impact on our same store sales if not our revenue given the amount of system sales that run through our collision boxes. So I think in general we feel good about the Q3 performance, but as you probably heard on the call cautious heading into Q4 for that section. The good news is to continue.

Um, I'd say mark, look the the way to think about it is we're really happy with the results we're seeing. So uh, we're fully rolled out nationwide at this point both company and franchise. Um, the team's doing an amazing job executing. Um, so we just building the multiple rolling up and you the, the new service has been quite good. Uh, we haven't seen NPS scores budget at all. So we're able to introduce a new service while continuing to deliver, you know, NPS scores in the high 700s which is, which is obviously fantastic margin profiles. Good, we're not seeing cannibalization, so I'd say, you know, check marks are

To do what it needs to in the portfolio, 66% margin for Q3 strong cash flow generator. So feel good about its role within the driven portfolio to generate cash and help us pay down debt as we needed to.

Mike Diamond: The good news is it continues to do what it needs to in the portfolio. 66% margin for Q3, strong cash flow generator. So feel good about its role within the Driven portfolio to generate cash and help us pay down debt as we need it to.

Okay.

Okay. Thank you.

Across the board for me, the most exciting things that proves that another growth factor for Take 5, right? So we've shown historically that we can grow organically and we can take our attachment rates and grow the existing, kind of basket of services, so to speak. But now we're showing that we can add a new service to the mix that fits within the fast friendly and simple model that we have and successfully execute that other growth factor. So, for me, that's very exciting.

Thank you. Thank you.

Your next question comes from Christian <unk> of J P. Morgan. Please go ahead.

Great, thank you very much and congrats on the great quarter.

Peter Keith: Okay. Thank you.

Thanks Mark. Thank you, Mark.

Hi, good morning, Thanks for taking our question could you maybe quantify your exposure to first brands or lack thereof, and whether thats more take five versus the franchise brand I think within take five it doesn't look like you source filters from them, but maybe source wiper blades from one of their brands. So if you could quantify your exposure there and then any.

Mike Diamond: Thank you.

Danny Rivera: Thank you.

Steve Alexander: Your next question comes from Christian Carlino of JPMorgan. Please go ahead.

Your next question comes from. Robbie ohms of driven Brands, please go ahead.

Christian Carlino: Hi, good morning. Thanks for taking our question. Could you maybe quantify your exposure to First Brands or lack thereof, and whether that's more Take 5 versus the franchise brands? I think within Take 5, it doesn't look like you source filters from them, but maybe source wiper blades from one of their brands. So could you quantify your exposure there and then any color you can provide around that? Thanks.

<unk> color you can provide around that.

Yes, I mean, very very limited impact.

To the extent there is we've got various other suppliers so.

Not don't believe it's a read through on anything in the auto category and not really worried about the impact to us.

Mike Diamond: Yeah. I mean, very limited impact. To the extent there is, we've got various other suppliers. So, don't believe it's a read-through on anything in the auto category, and not really worried about the impact to us.

Um you guys have kind of been answering it but maybe going to ask for a little more clarification. So on the Take 5 side choppiness is a deferral traffic situation or and and you would you're you're seeing no change kind of in attachment rates or um premiumization Trends or maybe some color on on that.

Got it that's helpful and can you talk about trends by by region any notable outperformers or Underperformers and then similarly on the quarter to date the choppiness more apparent in any particular regions, maybe the DC mid Atlantic region, given the government shutdown or maybe some of your lower income markets and any comp.

Christian Carlino: Got it. That's helpful. And could you talk about trends by region, any notable outperformers or underperformers? And then similarly, on the quarter to date, is the choppiness more apparent in any particular regions, maybe the DC and Mid-Atlantic region, given the government shutdown, or maybe some of your lower-income markets? Any comments there?

That's there.

Yes look I would say that the general Choppiness that we're seeing coming into Q4 is I would say generally speaking across the board yes.

Danny Rivera: Yeah. Look, I'd say the general choppiness that we're seeing coming into Q4 is, I'd say, generally speaking, across the board. Yes, I could pick a data point here or there. If there happens to be a location that's in a particularly distressed neighborhood, maybe it's a little bit. But just I'd generalize it to choppiness across the portfolio coming into the fourth quarter. And as I think about just overall regional, Take 5 in particular is a growing brand. So you're going to see differences more than anything else based on the maturity of the stores, right? So if we've got a market where the vast majority of the stores are less than two years old, well, that market is still ramping. If you talk about a market like New Orleans, where the brand originated and we've been in that market for 30 years, that's a completely different profile.

Can pick a data point here or there.

There happens to be a location that is in a particularly distressed neighborhood, maybe it's a little bit, but just I generalize it to choppiness across the portfolio coming into the fourth quarter.

And as I think about just overall regional.

Take five in particular is a growing brand so youre going to see differences more than anything else based on the maturity of the stores right. So if we've got a market where the vast majority of the stores are less than two years old where that market is still ramping if you talk about a market like New Orleans, where the brand originated in we've been in that market for 30 years, that's a completely different profile so take five.

Yeah, so, welcome to driven Brands. Robbie, by the way, nice to have you on the team. Um, so yeah, choppiness look uh, choppiness, that Take 5 um is is is what we've kind of alluded to. It's just we're seeing up and down days. I'd say on the, uh, non old change Revenue side of the equation and attachment rates were not really seeing any changes there. Um, so attachment rates continue to be strong. We talked about we've grown them now into the low 50s, we talked about differential, and and how that's, you know, a positive behind the business. Uh, as we come into Q4 though, we're just seeing a little bit of choppiness in terms of traffic here and there. Um, and again, it's across the portfolio. Um, and to Mike's point, I mean, he emphasized this earlier, it's choppiness, right? It's it's there's some really good days and then there's some days where it's not so good. So um, I'd say no changes to non oil change Revenue, no changes to premiumization. We continue to see both of those be quite strong. Um, but as we look across the portfolio, just a bit of uncertainty here in the fourth quarter.

Fourth quarter, and a bit of just up and down given given you know, any given day.

There is still a dynamic growing new business and if youre looking for regional trends its going to be more proportionate to just the majority of the stores in that market than anything else.

That that's really helpful. And then just, you know, sort of taking choppiness over to, you know, mo and Carstar Etc. The

Danny Rivera: So Take 5 is still a dynamic, growing new business. And if you're looking for regional trends, it's going to be more proportionate to just the maturity of the stores in that market than anything else.

Got it thank you very much.

Thanks, Craig.

There's is it similar choppiness in direct repair program Trends? Or is that more stable? Um, you know what do what are you seeing on the direct repair program trends?

Your next question comes from Mike <unk> of benchmark. Please go ahead.

Christian Carlino: Got it. Thank you very much.

Hey, good morning, guys. Thanks for taking my question.

Danny Rivera: Thanks, Christian.

Steve Alexander: Your next question comes from Mike Albanese of Benchmark. Please go ahead.

Can you just comment on the labor market and I guess overall strength in the labor pool in terms of hiring and retention.

Mike Albanese: Yeah. Hey, good morning, guys. Thanks for taking my question. Can you just comment on the labor market and, I guess, overall strength of the labor pool in terms of hiring and retention?

Yes.

Got it.

Specifically for <unk>, Yes look I would say from our perspective at least the team is having a fine job are doing a fine job hiring it's not I'd say, it's not any better or any worse than it's been trending kind of the entire year.

Danny Rivera: Yeah. I mean, so.

Mike Diamond: Specifically for Take 5.

Danny Rivera: Specifically for Take 5, yes. Look, I'd say from our perspective, at least, the team is having a fine job or doing a fine job hiring. I'd say it's not any better or any worse than it's been trending kind of the entire year. We have a really strong and robust pipeline for bringing in employees at all levels of the organization. It's something that we stay on top of. I wouldn't say from a trends perspective it's any more or less worrisome than it's been the whole year.

We have a really strong and robust pipeline for bringing in employees at all levels of the organization.

It's something that we stay on top of it but I wouldn't say from a trends perspective that is any more or less worrisome that it's that it's been the whole year.

Got it thanks guys.

Yeah, I I say it's choppiness, you know, across the portfolio right now as a relates to drps, right? So that's specifically in the Collision business. I mentioned this a second ago. But you know, if you look at what's been happening with that industry call it estimates down, high single digits, q1, and Q2 the overall industry had a bit of a recovery and, and the third quarter and improved sequentially Q2 to Q3. We think that Q4 is going to probably soften a little bit. And it's going to look more like Q2. Um, so that's just the industry trends that we're seeing. Um, and that it's obviously related to the DRP, you know, that's that's all kind of related. Um, but again, as I think about our Collision business, we've been steadily taking care of the entire year. Uh, that didn't change. You know, q1 to Q3. We don't expect, it's going to change in Q4. So even if the industry softens a little bit, in Q4, we expect to continue to take share.

Thank you.

As a reminder, if you wish to ask a question. Please press star one.

That's really helpful. Thanks so much.

Mike Albanese: Got it. Thanks, guys.

Next question comes from Marvin Fong of BTG. Please go ahead.

Danny Rivera: Thank you.

Mike Diamond: Thank you.

Your next call comes from Peter, KY, of Piper Sandler. Please go ahead.

Steve Alexander: As a reminder, if you wish to ask a question, please press star one. Your next question comes from Marvin Fong of BTIG. Please go ahead.

Hi, good morning.

My question.

Nice quarter.

Yes, most of my questions have been asked here, but.

Just thought I'd ask on unlike take five.

Chris O'Cull: Hi, good morning. Thanks for taking my questions. Nice quarter here. Most of my questions have been asked here, but just thought I'd ask on Take 5 specifically: are you seeing any changes to the unit economic story? Is there some opportunity, given sort of a macro, to kind of take advantage of? Maybe some lower lease expenses or. Conversely, are you seeing any increase in equipment costs or anything like that? Just any insight there that you'd bring.

Specifically are you seeing any changes to the unit economic story, some opportunity given sort of the macro.

Take advantage of.

Well, maybe some lease expenses.

Hi. This is Sarah on for Peter. Thanks for taking our question. Um, can you just break down the common Improvement within franchisees, franchise a bit more, specifically maintenance? And then, are you seeing underlying Improvement, in Collision demand? Or are you seeing that improvement from Mancos continuous Improvement framework. Um, and then just when did you start to see these sequential improvements throughout the quarter?

Or Conversely.

The increase in.

No equipment costs or anything like that.

Thanks.

Well, maybe I'll take the first part of your question and maybe Mike wants to take the second part generally speaking, we're really happy with the ramp that we're seeing across all of our vintages right I think some of the things that we've put out there. If you look at the vintages 2023, and prior Theyre all ramp it will on average theyre ramping to $1 million <unk> within 24 months so that.

Danny Rivera: Maybe I'll take kind of the first part of your question, and maybe Mike wants to take the second part. Generally speaking, we're really happy with the ramps that we're seeing across all of our vintages, right? I think some of the things that we've put out there, if you look at the vintages 2023 and prior, they're all ramping, well, on average, they're ramping to a million-dollar AUVs within 24 months. So that continues to be true. We're quite happy with that. We see nice returns on our new stores and consistent ramps. I'll put the same data point out there that I mentioned a second ago. If you're looking for one of the best testaments to the growth of the system and to the steadiness of the ramps, I'd look to 40% of our franchisees are on either their second, or their third unit.

<unk> to be true, we are quite happy with that we see nice returns on our new stores and consistent ramps and I'll put the same data points out there that I mentioned, a second ago, if youre looking for one of the best Testaments to the growth of the system into the steadiness of the ramps I'd look to 40% of our franchisees are on their either their second or their third Ada so the.

The reality is is that if the units werent ramping consistently and predictably you just wouldn't see that level of investment. So we continue to be quite happy with the ramps that we're seeing.

Hey sir, yeah, happy to take that. So, I will start by saying, you know, in general, we don't break out the full brand performance across our franchise Brands. I would, I would call it a couple of things though that we mentioned in the prepared remarks. You know, mine is he continues to to operate? Well Mako, which is our Mo discretionary. Brand has been under pressure, um, really for the entire year and while that improved, you know, some in Q3 that continues to probably be our most pressured franchise brand. Um, as Danny mentioned, we have, we did see some improvement in Q3 in Collision. Um, that has an outsized impact on our same store sales, if not our Revenue, given the amount of system sales that run through our Collision boxes. So you know I think in general we feel good about the Q3 performance but as you probably heard on the call, cautious heading into Q4 for that section, the good news. Is it continues to do?

Danny Rivera: So the reality is that if the units weren't ramping consistently and predictably, you just wouldn't see that level of investment. So we continue to be quite happy with the ramps that we're seeing.

The other point I'll answer it in a couple of different ways, which is absolutely always look forward to opportunities to take cost out of the box and make sure. We're getting the best rates possible I think given the relative use of our footprint.

What it needs to in the portfolio 66% margin for Q3 strong cash flow generator. So feel good about its role within the driven portfolio to generate cash and help us pay down debt as we needed to.

Mike Diamond: To the other point, I'll answer it in a couple of different ways, which is, I mean, absolutely. We always look forward to opportunity to take cost out of the box and make sure we're getting the best rates possible. I think, given the relative youth of our footprint, we still have a lot of lease term left in a lot of these, as well as the fact that a small box size means that the lease expense doesn't necessarily carry the same weight as it does in some other instances. That said, we never miss an opportunity to have a discussion around what a good partner we are. And so, making sure that we have those conversations with our landlord.

Okay, thank you.

Thank you. Thank you.

We still have a lot of lease term left and a lot of these as well as the fact that a small box size means that the lease expense doesn't necessarily carry the same weight as it does in some other instances.

Your next question comes from Christian Carino of JP Morgan. Please go ahead.

That said, we never Miss an opportunity to have a discussion around what a good partner we are.

And so making sure that we have those conversations with our with our landlord on the build cost again, one of the advantages of the take five model is a relatively low build cost to begin with lower than some of our competitors in the industry, but that doesn't change our focus on making sure. We continue to keep that advantage and find ways to make sure we are deploying.

Quantify your exposure there and then any color you can provide around that. Thanks.

Mike Diamond: On the build cost, again, one of the advantages of the Take 5 model is a relatively low build cost to begin with, lower than some of our competitors in the industry. But that doesn't change our focus on making sure we continue to keep that advantage and find ways to make sure we are deploying money correctly to deliver the right experience, but not more than we need to. So it is absolutely an opportunity. We continue to take a look at it, but I would say it's probably more of an opportunistic opportunity than a big thing we need to focus on. Most importantly, like Danny said before, the unit-level economics continue to be strong. We have a strong pipeline of both franchise builds and corporate stores going forward, and feel really good about where Take 5 is positioned for future growth.

Money correctly to deliver the right experience, but not not more than we need to so it is absolutely an opportunity. We continue to take a look at it but I would say, it's probably more of an opportunistic opportunity than a big thing we need to focus on most importantly, like Danny said before the unit level economics continue to be strong we have a strong pipeline.

Yeah, I mean, very, very limited impact. Um, and, you know, to the extent there is, we've got various, um, other suppliers. So, um, not don't believe it's a read through on anything in the auto category. And, and not really worried about the impact to us.

Line of both franchise builds and corporate stores going forward and feel really good about where it take five is positioned for future growth.

Got it that's helpful. And could you talk about Trends by by region? You know, any notable out performers are underperformers and then similarly on on the core to the date is the choppiness more apparent in any particular regions. Maybe, you know, the DC Mid-Atlantic region given the government shutdown or, or maybe some of your lower income markets in any comments there.

Great and maybe as a follow up my follow up.

On the commentary that.

The insurance side of the collision business could be more like the second quarter.

Chris O'Cull: Great. And maybe as a follow-up, my follow-up. On the commentary that the insurance side of the collision business could be more like the second quarter, acknowledging that there was a positive trend here in the third quarter, could you just kind of double-click a little bit more on what you're seeing there? Is it the claims avoidance aspect of it, or are you actually seeing something in the loss rates and the behavior of the insurance companies that's also kind of driving kind of a backpedaling in the trends there?

Acknowledging that there was a positive.

The trend here in the third quarter, but could you just kind of.

Double click a little bit more on what Youre seeing there is it is it the claims avoidance aspect of it or you're actually seeing something in the <unk> and the behavior of the insurance.

Also kind of driving kind of.

Backpedaling.

And the trends there.

Yes, I think its nothing new per se right. So youre talking its claim avoidance. Its total loss rates and then I think it's also just the uncertainty that we're talking about heading into the fourth quarter. So I think when you put those three things in a blender.

Yeah, look, I say that the general choppiness that we're seeing, uh, coming into Q4 is, I'd say generally speaking across the board. Yes, you know, that, you know, I could pick a data point here or there. Um, you know, if there happens to be a location that's in a particularly distrusted neighborhood, maybe it's a little bit, but just, you know, I generalize it to choppiness Across the portfolio, coming into the fourth quarter. Um, and as I think about just overall Regional, you know, Take 5 in particular as a growing brand, so you're going to see differences more than anything else, based on the maturity of the stores, right? So if we've got a market where the vast majority of the stores are, you know, less than 2 years old or that market is still ramping. If you talk about a market like New Orleans where you know the brand originated and we've been in that market for 30 years, that's a completely different profile. So Take 5 is still a dynamic growing new business. And if you're looking for

Danny Rivera: Yeah. I think it's nothing new per se, right? So you're talking it's claim avoidance, it's total loss rates, and then I think it's also just the uncertainty that we're talking about heading into the fourth quarter, right? So I think when you put those three things in the blender, it leads us to believe that the fourth quarter will look more like the second quarter.

For regional Trends, it's going to be more proportionate to just the maturity of the stores in that market than anything else.

It leads us to believe that the fourth quarter will look more like the second quarter.

Got it. Thank you very much.

Thanks for

Got it okay. That's great. Thank you both.

Thanks, Robert Thank you.

Your next question comes from Mike Albanese of Benchmark. Please go ahead.

Ladies and gentlemen, there are no further questions at this time that concludes today's conference call. Thank you for your participation you may now disconnect.

Chris O'Cull: Got it. Okay. That's great. Thank you both.

Danny Rivera: Thanks, Marvin. Thank you.

Yeah. Hey, good morning guys, thanks for taking my question. Uh, can you just comment on the labor market? And I guess, overall, trying to labor pool in terms of hiring and retention

Steve Alexander: Ladies and gentlemen, there are no further questions at this time. That concludes today's conference call. Thank you for your participation. You may now disconnect.

yeah, I mean

Specifically for Take 5. Yes. Uh, look, I'd say from from our perspective, at least, uh, the team is, is having a fine job or doing a fine job hiring. It's not, I'd say it's not any better or any worse than it's been trending. Kind of the, the entire year. Um, we have a really strong and robust pipeline for bringing in employees at all levels of the organization. And, you know, it's it's something that we stay on top of but I wouldn't say from a trend perspective, it's any more or less worrisome than its than it's been the whole year.

Got it. Thanks guys.

Thank you. Thank you.

As a reminder, if you wish to ask a question, please press star 1.

Your next question comes from Marvin. Fong of btig. Please. Go ahead.

Hi. Good morning. Uh thanks for taking my questions. Um, nice quarter here. Um yeah, most of my questions have been asked here but uh just thought I'd ask on on like Take 5 uh specifically are you are you seeing any changes to the unit economic story is there? Some opportunity given sort of a macro to kind of take advantage of of, um, you know, maybe some some lower lease expenses or or, or conversely. Are you seeing any increase in in in

No equipment costs or anything like that. I just uh, any insight that we break.

Well, maybe I'll take kind of the first part of your question and maybe Mike wants to take the second part. Generally speaking, you know, we're really happy with the ramps that we're seeing across all of our vintages, right? I think some of the things that we've put out there, if you look at the vintages 2023. And prior, uh, they're all ramping, well on average, they're ramping to a million dollars auvs, uh, within 24 months. So that, you know, continues to be true. We're quite happy with that. We see nice Returns on our new stores and consistent ramps. And, you know, I'll put the same data point out there that I mentioned a second ago. If you're looking for 1 of the best Testaments to the growth of the system and to the steadiness of the ramps, I'd love to, you know, 40% of our franchises are on their either their second or their third Ada. So the reality is, is that if the units weren't ramping consistently and predictably, you just wouldn't see that level of investment. So we continue to be quite happy with the ramps that we're seeing.

Um, but that doesn't change our focus on making sure we continue to keep that advantage and find ways to make sure we are deploying money correctly to deliver the right experience. But not not more than we need to. So, it is absolutely an opportunity. Um, we continue to take a look at it but I would say it's probably more of an opportunistic opportunity than than a than a big thing. We need to focus on. Um, most importantly like Danny said before, you know, the unit level economics continue to be strong. We have a strong pipeline of both franchise builds and corporate stores going forward. Um and feel really good about where it take 5 is positioned for future growth.

Great. And and maybe as a follow up, my follow up, um, you know, on the commentary that uh the the insurance side of the Collision business, could be more like the second quarter. Um, you know, I I acknowledging that there was a positive intellectual Trend here in the third quarter but could you just kind of, um,

Double click a little bit more on what you're seeing. There is, is it, is it the claims avoidance aspect of it? Or are you actually seeing something in the last 3 weeks and, and the behavior of the insurance companies that also kind of driving kind of, um, a back pedaling and and, and the trends there.

Yeah, I think it's nothing new per se, right? So you're you're talking, it's claimed avoidance, its total loss rates. And then I think it's also just the uncertainty that we're talking about heading into the fourth quarter, right? So I think when you put those 3 things in the blender, um, it leads us to believe that the fourth quarter will look more like the second quarter.

Got it. Okay, that's great. Thank you, both.

Thanks Marvin. Thank you.

Hi, Jason gentlemen. There are no further questions at this time. That concludes today's conference call. Thank you for your participation. You may now disconnect